vrijdag 17 mei 2019

Bubble watch 2019 WeWork and The Rabbit

It is 2 decades since the dotcom bubble and with hindsight it is easy to see how ridiculous market caps of Cisco Systems et al were in the year 2000 by using Peter Lynch charts.
Yesterday Jeff Koon's Rabbit was sold for $91m the highest price ever for a living artist, beating Hockney.
WeWork has filed for a >$50b IPO.
The company is seen as a competitor of Regus office space rental, but is also a social network based on the kibbutz and commune childhoods of the founders.
But just to get an idea of orders of magnitude, some back of the envelope math:
WeWork rents out 1m Square meters of office space. Say they earn a hefty net profit of €100/m per year, then earnings would be $100m multiple by a multiple of 20 and you get an intrinsic value guesstimate of $2b.
The IPO is 25x...

Another angle: WeWork has 400k members. What are investors paying per member?
Price $50b / 400k = One Hundred and Twenty-Five Thousand Dollars per member.
Life Time Value? Membership is $50 per month x 12 months is $600 per year. Times 10 = Six Thousand Dollars and that's Sales not Net Profit...
Also 25x too expensive.

One could argue WeWork is part of a "Unicorn" bubble. Check back in the year 2029. Also curious to see Aswath Damadorans take at Musing on Markets.

Geen opmerkingen:

Een reactie posten