Pre-market actions: WeWork is finally made public. Many things have changed

0


“What happened to WeWork was not just a failure of this particular set of individuals,” New York Times columnist Shira Ovide wrote. who was at Bloomberg at the time. “It’s a consequence of the last decade of easy money that has prompted investors to throw money at assets promising to grow quickly. It’s been a silly peak period, and they won’t last forever.”

What’s happening: Shares of the flexible office space provider are expected to start trading on the New York Stock Exchange on Thursday under the symbol “WE.”

But it’s a different business, a different world – and a very different WeWork.

Then: Initially, WeWork pursued a traditional IPO. Bankers were expected to give the company a stunning valuation. At its peak, private investors thought WeWork was worth $ 47 billion.

Now: Thursday’s listing follows a merger with BowX Acquisition Corp., a special purpose acquisition company, or SPAC. The deal values ​​WeWork at around $ 9 billion.

Then: When WeWork released its 2019 IPO prospectus, questions quickly arose about how quickly it was burning money. The company said that although it was rapidly expanding its business, it had lost $ 1.9 billion in 2018 and $ 904 million in the first half of 2019.

WeWork’s corporate governance also came under scrutiny after it was revealed that then co-founder and CEO Adam Neumann had amassed huge voting power, giving him extensive control over the company’s management.

Now: Under Sandeep Mathrani, the real estate veteran who took over as CEO in early 2020, WeWork has cut costs and overhauled its lease portfolio.

Yet the company is still losing money. Following the PSPC deal, which will raise $ 1.3 billion, Neumann will have approximately 11% voting rights.

Columbia Business School professor Len Sherman said taking the PSPC route allows WeWork to avoid the scrutiny it has drawn in the past.

“The advantage of a PSPC offering is that it allows WeWork to make upward forward growth projections that would not be permitted under traditional IPO regulatory rules,” he told me. .

Then: What is Covid-19?

Now: The pandemic has radically changed the office market as more and more people work from home.

“We believe that an increase in working from home reduces office demand by about 15%,” Daniel Ismail, chief analyst for the Green Street office team, told me. “It’s a real paradigm shift.”

It’s not all bad news for WeWork, however. Ismail thinks companies want more flexible office deals as workers come back and will prefer to sign one or two year contracts with a company like WeWork instead of entering into longer leases that span eight to 10 years. years.

He predicts that the flexible office market, which currently only accounts for 2% of total U.S. office stock, could grow to 10% by the end of the decade.

That said: Shares of IWG, which Ismail says is WeWork’s main publicly traded competitor, are down 13% this year as uncertainties persist.

One more thing: Neumann is now infamous (he will be played by actor Jared Leto in an upcoming Apple TV + series). But that doesn’t stop him from celebrating WeWork’s delayed debut. The Financial Times reports that Neumann will be having a party in New York on Thursday with the first employees of the Standard Hotel.

What are the supply chain issues? Tesla posts record quarter

Automakers around the world are struggling as issues of securing critical parts affect production. You’re here (TSLA) is not exempt – but it is found to be resilient.

The latest: The company announced another record quarter after the U.S. markets closed on Wednesday. Between July and September, it made a profit of $ 1.6 billion, an increase of 389% from the same period last year.

Revenue increased 57% from 2020, even as the company made less by selling regulatory credits to other automakers, who use them to meet environmental standards and avoid heavy fines.

Analysts have warned Tesla needs to become less reliant on this lucrative industry but is expected to decline as competitors ramp up production of electric vehicles.

Still tough: The company warned it was having difficulty obtaining computer chips and other materials, even though it was able to overcome those issues in the third quarter.

Tesla previously disclosed record sales during the period, up 20% from the previous three months and 73% from the previous year.

“Due to parts shortages and logistical variability, we have not been able to run our factories at full capacity,” CFO Zachary Kirkhorn told analysts. “It is important to note that although we have roughly doubled deliveries since the start of the year, this has been exceptionally difficult to achieve.”

Kirkhorn said customers are waiting longer for vehicles and backlogs are increasing.

“The only practical way to solve this problem immediately is to do everything possible to build more cars on our existing production lines,” he said.

Investor Snapshot: Stocks are down more than 1% in pre-market trading.

Pinterest action soars on PayPal takeover chatter

Could Pay Pal (PYPL) to buy Pinterest (PINS)? Investors in the social media company certainly hope so.
Pinterest shares climbed nearly 13% on Wednesday after the media reported that the online payment provider could buy the bookmark website. PayPal shares fell 5%.

The deal could be valued at $ 45 billion, making it the biggest tech deal of the year, Bloomberg reported, citing people with knowledge of the matter. Reuters and the Wall Street Journal have also flagged PayPal’s interest, citing sources.

Reflection: PayPal is taking steps to become a “super app” in the vein of Alibaba Alipay and Tencent’s WeChat, which are huge in China. Last month, the company unveiled a new “all-in-one” interface featuring a high-yield savings account, an invoice management system and new shopping tools that allow customers to earn rewards.

Pinterest has also rolled out new features to make shopping easier on its site and is trying to strengthen its offerings for advertisers.

“The potential deal would be a big turning point for [PayPal], but we think [the Pinterest deal] makes sense in the context of [PayPal’s] broader business push, ”Barclays analyst Ramsey El-Assal told clients.

Pinterest is known as a wellness corner on the Internet. But he doesn’t come without luggage. The company paid $ 22.5 million last year to settle a sex discrimination lawsuit brought by its former chief operating officer. He did not acknowledge his responsibility under the settlement.

Following

Alaska Air (ALK), AutoNation (A), American Airlines (AAL), Southwest Air (LCV) and AT&T (T) publish the results before the US markets open. Chipotle (GCM), Intelligence (INTC), Mattel (CARPET), Break (BREAK) and Whirlpool (RTH) follow after the close.

Also today :

  • Initial jobless claims in the United States for last week at 8:30 a.m. ET.
  • Existing US home sales for September will follow at 10 a.m. ET.
Coming tomorrow: earnings of American Express (AXP) and Honeywell (HON).


Leave A Reply

Your email address will not be published.