Equity Analyst, LightStream Research

Supun Walpola

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/28061" target="_blank" data-smartkarma-citation="entities:28061:1">WeWork </a>(rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late last year (December 2019). The company has not yet set a date for its IPO, but considering that the filing was done just weeks after Uber, WeWork’s IPO debut could also be just around the corner. The company is yet to release its S-1 statement to the public.WeWork seems to be following the footsteps of many unicorns these days, by pursuing a strategy of “growth at any cost”. WeWork’s revenue increased by around 10x over the past three years, but this has come at the expense of heavy losses and significant cash burn. WeWork’s robust growth is no doubt going to be its main selling point in the IPO, but with the recent examples of <a href="https://www.smartkarma.com/entities/430" target="_blank" data-smartkarma-citation="entities:430:1">Uber (UBER US)</a> and <a href="https://www.smartkarma.com/entities/24423" target="_blank" data-smartkarma-citation="entities:24423:1">Lyft Inc (LYFT US)</a> who were penalised heavily by public investors for pursuing unprofitable growth, we are not very confident that investors would buy WeWork’s growth story either.Perhaps the only way that WeWork could justify its unprofitable growth is through some really strong unit economics. However, according to our analysis, WeWork seems to be barely profitable even at the per desk level. WeWork’s higher spending on overheads and leasehold improvements seem to be stressing out its bottom line.

WeWork (rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late last year (December 2019). The company has not yet set a date for its IPO, but considering that the filing was done just weeks after Uber, WeWork’s IPO debut could also be just around the corner. The company is yet to release its S-1 statement to the public.WeWork seems to be following the footsteps of many unicorns these days, by pursuing a strategy of “growth at any cost”. WeWork’s revenue increased by around 10x over the past three years, but this has come at the expense of heavy losses and significant cash burn. WeWork’s robust growth is no doubt going to be its main selling point in the IPO, but with the recent examples of Uber (UBER US) and Lyft Inc (LYFT US) who were penalised heavily by public investors for pursuing unprofitable growth, we are not very confident that investors would buy WeWork’s growth story either.Perhaps the only way that WeWork could justify its unprofitable growth is through some really strong unit economics. However, according to our analysis, WeWork seems to be barely profitable even at the per desk level. WeWork’s higher spending on overheads and leasehold improvements seem to be stressing out its bottom line.

WeWork IPO Preview: “Growth at Any Cost” and Some Really Bad Unit Economics

United States

Anywhere Real Estate Inc. operates as a holding company. The Company through its subsidiaries, provides real estate, franchising, brokerage, relocation, and title and settlement services. Anywhere Real Estate offers its services worldwide.

Tejon Ranch Co. is a diversified real estate development and agri-business company owning land located in Los Angeles and Kern counties, California. The Company is in the process of developing its land holdings along transportation corridors into master-planned business and residential communities.

Forestar Group Inc. operates as a residential lot development company. The Company acquires entitled real estate and develops it into finished residential lots for sale to homebuilders with a strategic focus on asset turns. Forestar Group serves customers in the United States.

CorEnergy Infrastructure Trust, Inc. is a real estate investment trust. The Company primarily owns  midstream and downstream U.S. energy infrastructure assets subject to long-term triple net participating leases with energy companies. These assets include pipelines, storage tanks, transmission lines and gathering systems.

Trinity Place Holdings, Inc. owns real estate and intellectual property assets from the Syms Corporation Chapter 11. The company's current business plan includes the monetization of 16 commercial real estate properties and the development of 28-42 Trinity Place in Lower Manhattan.

Cushman & Wakefield plc operates as a commercial real estate company. The Company develops commercial properties, as well as provides property leasing, facilities management, tenant representation, and valuation services. Cushman & Wakefield serves clients worldwide.

Ashford Hospitality Trust, Inc. operates as a self-advised real estate investment trust focusing on the lodging industry. The Company owns several hotel properties in primary, secondary, and resort markets throughout the United States.

Clipper Realty Inc. operates as a real estate investment company. The Company acquires, owns, manages, operates, and repositions multi-family residential and commercial properties in the New York metropolitan area.

Office Properties Income Trust operates as a real estate investment trust. The Company focuses on ownership and leasing of office properties. Office Properties Income Trust serves customers in the United States.

The Howard Hughes Corporation develops real estate. The Company manages master planned communities, shopping malls, and mixed-use developments throughout the United States.

Luminor Financial Holdings Limited is a property developer engaged in developing integrated residential and commercial properties in the PRC. The Company's projects are integrated residential and commercial properties in Chongqing and other second and third tier cities in the PRC, which are mainly large-scale, mid to high end and multi-phased projects.

Luminor Financial Holdings Limited (STHL SP)

Boill Healthcare Holdings Limited operates non residential building construction. The Company develops and constructs club houses, parking lots, and other projects. Boill Healthcare Holdings also operates property development, health resort development, securities investment, foundation piling subcontracting, and other businesses.

The Agency Group Australia Ltd provides real estate services. The Company buys, sells, and rents commercial and residential real estate spaces, as well as social media campaigns and market research services. Agency Group serves customers worldwide.

GPS Alliance Holdings Limited is a holding company. The Company, through its subsidiaries, operates in real estate, property development and interior design.

Zodiac Ventures Ltd. develops real estate and offers construction services.

Grand Field Group Holdings Limited, through its subsidiaries, develops and invests in properties.

Eminence Enterprise Limited provides real estates services. The Company engages in property investment and development, as well as invests in listed securities and money lending business. Eminence Enterprise serves investors in in Hong Kong.

International Equities Corporation Limited is a property developer and operates a hotel in Perth, Western Australia.

Yincheng International Holding Co., Ltd. operates as a property service provider. The Company offers development and sale of residential and commercial properties, leasing of investment properties, and other real estate services. Yincheng International Holding serves clients in China.

KC Property Public Company Limited and its subsidiaries develop land and real estate in Thailand. The Company develops commercial buildings, apartment buildings, condominiums, single houses, townhouses, cluster houses, and garden resorts. The Company's projects include Ban Klang Buri, Modern Home  Place, and Modern Home Garden Village.

WeWork Inc. provides co-working spaces for individuals and entrepreneurs. The Company offers private offices, office suites, headquarters, and custom build out options to fit a variety of office needs, as well as desk spaces and conference rooms. WeWork serves customers worldwide.

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WeWork (WEWKQ US)

WeWork IPO Preview: “Growth at Any Cost” and Some Really Bad Unit Economics

WeWork (rebranded now as The We Company) is another unicorn eyeing for an IPO this year. WeWork confidentially filed for its IPO with the SEC late...

Supun Walpola

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