WeWork’s List of Potential Conflicts Adds to Questions Ahead of IPO

What does it mean to underwrite an IPO? Isn't it caveat emptor? What is being unwritten?

I did know some friend who were tenants five years ago but today....no one.

Why? Because here are so many co-working spaces that have popped up over the last few years. There is no moat or barrier to entry other than the capital to lease a place and set it up. These new co-working places also tend to be cheaper.

You can see the net effect on their S-1 filing where their per-desk revenue is slowing and their growth rate is slowing in markets where they have existing locations. The only way they can grow at a decent pace is to open new locations in new markets and that is very very capital intensive.

What's good for customers and what's good for shareholders are very different things. WeWork having an infinite number of locations for you to use your membership at is great for you as a customer. It's pretty bad for shareholders, though, when the bottom falls out of the market and WeWork is stuck in leases for locations that nobody goes to.

I think a lot of the IPO criticism comes from that way of thinking. So I don't think it's bad to "throw shade" at that business model while still being a customer. WeWork is taking all the risk out of real estate for you, the customer. That's good for you, but maybe bad for them.

I work in a Wework and I don't understand why it should by valued higher than any other office real estate company. They offer exactly the same as the other coworking spaces in my city, but are a bit more expensive.