WeWork - WE - Share Chat

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Comment on my above article:

“The real losers could be the tenants of We Work. Case in point, years ago I managed a branch office for a company that rented space in an “Executive Suites”. As a tenant you sublease from the corporation that has the master lease. Even if you make your payments on time, pay early and have a deposit, if the entity with the master lease does not pay, the landlord locks everybody out and sells the contents.
Fortunately, for us one of the security guards for the building was a buddy and he alerted me that a lockout of the master lease was coming the next day. I told as many of the other subleases as possible and got our computers, records & furniture moved out that day.
Sure enough the next day the locks were changed. I felt sorry for some of the tenants who did not act fast in leaving. Some were able to pay extra to move out their items while under the eyes of watchful guards. We all lost our prepaid rents and deposits since the main corporation filed bankruptcy. Each of their office locations had different ownerships so one bankruptcy did not affect the home corporation”

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It starts with phone booths… what’s next?

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Oh shit I’m sitting in one now hahaha

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WeWork meme game is on point too…

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Also this:

SoftBank Group Corp. is assembling a rescue financing plan for WeWork that may value the office-sharing company below $8 billion, according to people familiar with the discussions.

And this:

And this—WeCMO out:

WeWork Morale Is Low; Marketing Chief Steps Down - Bloomberg

Source - SoftBank Eyes WeWork Rescue Valuation Below $8 Billion - Bloomberg

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FT:

The Japanese tech group and the US bank have submitted competing plans to pump as much as $5bn into WeWork in a debt-and-equity deal that could value the group’s equity at $8bn or less, according to multiple people briefed on the matter.

The proposal from SoftBank, which has already sunk more than $10bn into the company, would significantly dilute other equity holders, including Mr Neumann.

Should Mr Neumann’s equity stake suffer a significant writedown as part of the deal, he could face a margin call from JPMorgan, UBS and Credit Suisse. They have lent the former WeWork chief executive hundreds of millions of dollars, using his stock as the main collateral, according to regulatory filings and people with knowledge of the matter.

To meet the lenders’ capital demands, Mr Neumann could be forced to pledge additional shares or cash in the margin call and sell some of the property and other assets he has accumulated. The entrepreneur has raised at least $700m through share sales and loans against his equity stake.

The stake owned by Mr Neumann and co-founder Miguel McKelvey was worth almost $13bn earlier this year, which would be worth about $2bn if the company’s valuation plummets to $8bn. After dilution, though, it would be worth far less. That does not include the value of a stake that Mr Neumann was granted in a complex transaction this summer.

If he were unable to meet the margin call or repay the loan, the lenders would face losses. The banks had earlier this year extended a $500m credit facility to the WeWork co-founder, with $380m of that line tapped by Mr Neumann as of the end of July. JPMorgan has also lent Mr Neumann nearly $100m, regulatory filings showed.

Source - SoftBank and JPMorgan at odds over WeWork rescue

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I’ve removed the latest conversations from here. Please keep discussions in-line with our guidelines.

You can check them out here: Community rules

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Get woke go broke. Disappointed in the reaction. Do whatever you need to to do

Edit 2: On contemplation I will not be leaving the forum or selling my shares. I’d just be letting those with faux outrage win. Comparing people on nationality in relation to dynastic families should never be thought as racist and says more about the accuser. You can compare me with the Guinness family all day!

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Good article I should’ve put in here last week. Can’t wait to see Nuemann’s next company :joy: I feel like he’d be selling air in a jar if he was born a few centuries before.

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FT:

Mr Neumann would be left with less than 10 per cent of the shares and voting rights at the company, three people briefed on the plan told the Financial Times. Marcelo Claure, SoftBank’s chief operating officer, would become chairman.

SoftBank will emerge with between 60 per cent and 80 per cent of WeWork’s equity under the package, which involves $5bn of new debt, injecting $1.5bn in equity and an offer to buy up to $3bn of existing shares.
…
The debt in the SoftBank proposal would be on better terms than the debt financing cobbled together by JPMorgan, however, one person briefed on the rival offers said.

Source - WeWork founder trades voting power to back SoftBank rescue

WeDrowning in debt:

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Good times for Neumann :moneybag: Incredible swindling that he’ll be a billionaire off the back of WeWork.

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Bad times or best deal ever?

  • 200M to give up board seat and voting rights
  • get to sell all his shares for up to 1B
  • another 185M consulting fee
  • free credit line
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Source - Bloomberg - Are you a robot?

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“Respect the hustle”

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“Be happy, be bright be you”

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“Better together”

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Softbank Vision Fund to write down USD 5 billion to USD 7 billion:

SoftBank is planning to take a writedown to its Vision Fund of at least $5 billion to reflect a plunge in the value of some of its biggest holdings, including WeWork and Uber Technologies Inc., according to people with knowledge of the matter.
…
The writedown could be as high as $7 billion, but the amount has not yet been finalized and could still change, one of the people said.

Source - SoftBank Vision Fund Planning Writedown of Over $5 Billion - Bloomberg

They invested USD 18.5 billion in WeWork. Post-money valuation - USD 12 billion :woman_shrugging:

This is still much higher than the competitor IWG (Regus):

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Just been to the beach

Also, met a successful Uber driver who knew a lot about investing. He is not wealthy - but he is rich. He has plenty of savings, passive income from money-generating real estate (mortgaged). That pays for rent and mortgages. Also, he sometimes side-hustles with Uber. He does not need the Uber job but it pays for holidays and nights out with the family.

He knows how to make and not lose money. No stock market trading. The relatively new but very affordable car - a highly depreciating asset and probably the second most expensive purchase of any family - is generating cash every week - as a side hustle.

How did he get there? He had a normal job with a pension plan back in the day.

Financial education is what made the difference - he got it from his parents. If it’s too late for us, it’s our turn to give that gift to our kids. We have the internet now.

Every week he drives a car around - on busy nights and mornings - and picks up UberPool and UberX passengers - Uber sends him just under USD 1,000.

Uber keeps the minority of all earnings from rides. It’s not a tech company.

Softbank has invested in Uber.

So, I thought it would be worth revisiting WeWork:

Softbank put the Sprint “A-team” in charge of saving WeWork - CNBC:

  • Masayoshi Son, Marcelo Claure and Ron Fisher are all on the Sprint board and are the three SoftBank executives now calling the shots at WeWork.

Let’s look at Sprint.

Investing does not require a math(s) degree

Even when you invest billions. Buy low, watch some value creation happen. Sell higher. If you can.

This is not machine learning with matrix on matrix multiplications.

A lot of stuff in accounting and equity trading is just basic calculus…

…covered in strange jargon so the outsiders have to pay fees to someone “in the know” or spend countless days studying boring material. Complexity-and-sometimes-or-often-BS-by-design.

When you look back at Softbank’s Sprint investment and divestment you learn that the maths behind it was just weird :woman_shrugging:

… SoftBank acquired its majority stake in Sprint for $7.65 a share in 2013.

How do you have a profit? Sell at a higher price than $7.65 a share.

SoftBank successfully engineered a sale of Sprint for $6.62 per share to T-Mobile in 2018.

So they got out with a net loss.

Then you find out that Sprint used to be a cool-ish company until Softbank arrived:

When SoftBank bought Sprint, it was the third-largest U.S. wireless carrier by subscribers. When SoftBank sold, Sprint was a distant fourth behind Verizon…

“Sprint has been an unmitigated disaster,” said Moffett. “Sprint has contracted steadily since SoftBank bought it, even in a growing wireless market. Their only hope for an exit is to pray their deal to sell it to T-Mobile is approved.”

Read more - https://www.cnbc.com/2019/10/26/softbank-taking-masayoshi-sons-sprint-playbook-to-wework.html

At least the resulting “new” company - T-Mobile US, which already exists and is not a new company - “will be” third largest - “again”.

Valuation is not an exact science

Correction:

…WeWork is actually “valued” at USD 8 billion.

The Bill Gates of Japan

Who’s running Softbank?

“He’s a very calculating strategist with a knack to see what the next big thing is,” said Ulrike Schaede, a professor of Japanese business at the University of California, San Diego. “Every time he does a big bet like this, like with Vodafone, the stock price of SoftBank plummets and everyone says he’s gone crazy and six months later people say, ‘Wow, he’s got a plan.’”

“He’s not an establishment player,” Steve Vogel, a professor of political science and the chair of the Center of Japanese Studies at the University of California, Berkeley, told Ars. “He’s a very aggressive, risk-taking, entrepreneurial person. He’s been colossally successful and had some colossal failures. But overall he’s made an impact on Japan—he’s the closest thing to Bill Gates in Japan.”

Source - How Sprint’s new boss lost $70 billion of his own cash (and still stayed rich) | Ars Technica

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Edit - UPDATE:

Who’s going to buy Meetup.com :neutral_face:

CNBC:

WeWork on Friday announced a “90-day game plan” that details sweeping changes to its businesses, including a divestiture of all “non-core businesses” and a reduction in headcount.

In a nearly 50-page presentation, WeWork said it plans to divest several related ventures, including Conductor, The Wing, Managed by Q, Meetup, Space IQ, Teem and Wave Garden. The company expects job cuts to occur across its ventures, G&A and growth-related functions, but said the community teams, which oversee WeWork’s physical locations, will not be impacted as a result of the move.

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Already part of Softbanks ranks with the merger of T-mobile and Sprint