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It’s Still Too Early To Invest In WeWork

It’s the moment that many investors never thought would come, but WeWork, following years of scandal, has finally made its public debut.

The shared-workspace company that once sought to “elevate the world’s consciousness” has finally made its public debut. 

Having suffered a complete collapse two years ago and aborting a planned IPO, how solid is WeWork (NYSE: WE) now?

What investors need to know about WeWork

It was far from a straightforward journey for WeWork to go public, having finally done so via a reverse merger with BowX Acquisition Corp, a special purpose acquisition company — or SPAC.

Valued at $47 billion in 2019, WeWork was lucky to get out the door yesterday with an estimated value of $9.34 billion after closing at $11.78 per share yesterday. Back in 2019, it was hemorrhaging money, scandal surrounded its founder, Adam Neumann, and after being bailed out by SoftBank, its value plummeted to $2.9 billion. 

However, it’s been clawing its way back ever since, and according to Neumann’s replacement as CEO, Sandeep Mathrani:

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn. As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever.”

Its preliminary Q3 results aren’t too shabby either:

  • Revenue jumped 10% from Q2 to $658 million. 
  • Total occupancy of owned spaces rose from 52% to 80%. 
  • Its new, subscription-based product has also risen to 32,000 customers in Q3 since launching in March.

However, a black cloud in the form of massive losses still overshadows the company, amounting to $3.2 billion in 2020. It’s possible that the ‘new normal’ of post-COVID office reality could be a good thing for WeWork as businesses opt for more flexibility rather than owned spaces. However, this is still far from a risk-free business, and investors should wait and see how WeWork performs in the coming quarters before considering an investment.

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