How Can a Company with $1.8 Billion in Revenue Lose $1.9 Billion? WeWork Shows How

The financial world has gone nuts.

By Wolf Richter of WOLF STREET

WeWork isn’t a publicly traded company yet and doesn’t have to disclose financial information to the public, but it issued bonds in April 2018 and has to show its hapless bondholders some figures about its financial performance. WeWork made this presentation available to the financial media, including the Wall Street Journal and Bloomberg. The four standout numbers that were reported:

  • Revenues in 2018 doubled to $1.82 billion
  • Losses in 2018 more than doubled to $1.93 billion.
  • Occupancy rate in Q4 fell to 80% from 84% in Q3, meaning it expanded its spaces faster than it could fill them.
  • The average revenue per “member” per year fell to $6,360, and is down 13.5% from the start of 2016.

For a nine-year old global company, generating larger operating losses than revenues is an art, takes some doing, and requires full connivance of the investors whose money this is – but really all they want to do is sell the thing to the public at a huge valuation and wash their hands off it.

The company, instead of being able to stand on its own self-sustaining business model after nine years of operating, is buying growth at a very high price that appears to be getting higher. But…

“We’re sitting on well north of $6 billion in cash,” said WeWork vice chairman Michael Gross. “We have access to a lot of capital in a lot of pockets and we have a big opportunity ahead”

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