Morning Brief – WeWork: Nice work if you can get it- they can’t as it turns out…
SGM-FX Wed 11 Sep 2019
WeWork: Nice work if you can get it- they can’t as it turns out…
Goldman Sachs had previously advised a pre IPO valuation of $65Billion for the trendy hipster office sharing business. Smaller businesses have been struggling to find office space in all major cities worldwide as WeWork have relentlessly mopped up multi occupancy buildings. Anything less than 500square metres is now much much harder to find.
So far WeWork has burnt through USD 3 Billion and included in that for the first 6 months of 2019 has lost $690 million. Investors have politely told the pointy heads at GS that they must be re-enacting the 1969 summer of love and smoking mind enhancing substances to have come up with such a colossal valuation on a business of this size with such losses.
Result: new suggested Goldman Sachs valuation of WeWork now $20 Billion. Surely a valuation drop of more than two thirds and $45 billion must call for some explanation and calling for some heads to roll at GS?!
By the way we struggle to see how a valuation of 6 times earnings to justify a price of $20 Billion can be justified when competitor IWG trades at a multiple of 1.3 times earnings. Looks like more red faces at GS in prospect.
A new or rather an old in fact a very old take on stealing customers’ data: this time from Japan. In these days of hacking and phishing, it is refreshing to hear of a Japanese clerk doing it the old way: in the moments that customers used their credit cards and input their Pins for purchases in a shopping mall just outside Tokyo, the clerk memorised their details. In fact he managed this 1,300 times. After this feat of memorising 16 digit numbers, he made two purchases of handbags valued at Yen 270,000 or approx. USD 2,500 and was caught. How? Police were alerted due to him ordering the bags to be delivered to his home address! Just brilliant!
Discussion and Analysis by Humphrey Percy, Chairman and Founder
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