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WeWork's parent company, The We Company, just filed its Form S-1 (you can read it https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm ) in preparation for its highly anticipated IPO, which could take place as early as next month.

There are so many red flags surrounding this company (beginning with the dumbest name ever) that I scarcely know where to start. How about with the financials: In the first six months of this year, the company managed to lose a staggering $690 million on revenues of $1.54 billion in revenue in the first six months of 2019 and posted a net loss of $689.7 million. That's a negative 45% net margin!

The Twitter-sphere is going nuts about what's in the S-1. Bloomberg reporter Shira Ovide just tweeted:

I have only read the related party section in the WeWork IPO filing so far, and I am not kidding that it is THE MOST BANANAS THING I HAVE EVER READ.

(I did a search in the S-1 for "related party" and "related parties" and came up with 68 and 39 hits, respectively!)

Geoffrey Batt tweeted:

WeWork minimum future lease obligations over 15yrs = $47.2 billion. Seems like leasing space to WeWork is the better business, which might explain why the CEO owns the buildings receiving WeWork lease payments in a separate company.

But not to worry, Batt adds, tongue in cheek:

The We culture is so tight members would sell their first born before breaking a lease. What's more, the filing says the total addressable market is a solid $3 trillion, and WE only realized 0.2% of it. I'm sure everything will be fine.

Whitney Tilson


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