It's been incredible watching each part of this unfold exactly as Matt Levine called it each week prior.
You start with the story the bankers sell you. They all want to tell you you're going to be bigger than you ever thought possible, because, well... those fees are awfully nice.
"We're going to IPO you at 20% of $PREVIOUS_VALUATION"
The counter-argument was, well, "We don't think you're worth that much, you're probably worth only $20B."
The problem is here... well there's not really a financial position you can take here especially as the short price skyrockets. Maybe you get some smug satisfaction, but overall, everyone in the early stage of trying to win the IPO for their bank is going to tell you what you want to hear.
Now... things suddenly change, you need to shop it around. Well, maybe you don't get the number you want. Maybe you do? You edge it a little down. Yet, all the benefits you have as a private company (insert your It's Always Sunny in Philadelphia Pepe Silvia meme of Mack trying to connect the dots) you can't really keep entirely as you try to collect that public check.
Matt was spot on here, of course, they're going to try and take apart some of those political rights that usually people grumble about (see Snapchat IPO) and then somewhat get over as time goes on.
Yet even that didn't do the trick! So you slash the economic upside, and once again that's not enough.
Maybe you even set the price low enough that you can hype it and it will go up, but at some point, the market will give its verdict and in this case: WeWork didn't cut it.
In many ways, it's an interesting litmus test of the health of the tech industry. Yes, there's been a bull market for this last decade, but bubble... maybe not. Maybe, this is great example of Wall Street being serious about how much large private companies are worth? Either way, what a crazy saga nonetheless. I wonder if they'll be able to (somewhat paraphrasing Matt) turn the dial from growth to revenue and approach the market later? Time will tell I guess.
Maybe we'll get an Alex Gibney documentary out of it!
I think it's probably a financial engineering company over everything else, but I mean "tech company" insofar as this post is going to the top of HN in a way a post about Regus might not.
This is something I don't get. Pretty much all of these businesses are aiming at dominance on some sector. They entered into the game with the understanding that it's all or nothing.
If they don't achieve that dominance, or if the sector itself turns out to be less than worthwhile, isn't it more likely that these companies are worth essentially zero, rather than some percentage of their target value?
It's possible some investors are buying in because they think they are getting into a viable-when-dominance-not-required business on the cheap.
(Me, I don't understand any of these businesses (We, Blue Apron etc) and let someone else take the risk.)
Lots of consolidation happening in auto manufacturing too, along with most fields. Even of the car makers that exist, I wonder how many would be kept propped up by a country just to ensure they retain manufacturing capability in case of war.
https://www.reuters.com/article/us-renault-m-a-fiatchrysler-...
But everyone selling at a loss is getting their money from someone buying. Since the price of some of these companies is nonzero, someone must think they are a good deal at that price. Just speculating as to why.
As for war fighting capability: that is the legit justification for ag support, but modern factories can’t be repurposed that way. Nobody would expect IBM to be able to retool to build machine guns any more.
The right fix is many automated reconfigurable on-demand factories making goods close to point of consumption. But that’s a long way away, and wind use humans.
Which is why steady-but-slow niche businesses don't get this kind of attention, even if they have better long-term prospects.
The product being sold at IPO is the promise of dominance of a market - because that implies a whole set of predictable relationships with investors, employees, and customers.
The product as sold to customers - whatever that is - is almost irrelevant.
A successful IPO is a convincing statement of political intent. We has almost managed that - but not quite enough to get it over the line.