In the latest sign that absolutely nothing makes sense anymore, WeWork filed formal regulatory paperwork with the Securities and Exchange Commission last week, officially notifying the world that it will soon be going public.
If you haven't heard of WeWork (or it's parent– 'The We Company'), it's a real estate company that owns practically zero real estate.
Instead, they lease vast amounts of office space in commercial buildings on long-term contracts, and then sub-lease that space to individual tenants– often small businesses– with short-term contracts.
It's essentially the same business model as Regus– which provides virtual office services, business addresses, and short-term office space, in pretty much every major city around the world.
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Yet Regus is actually profitable. Its parent company, UK-based International Workspace Group, reported a profit of nearly 300 million British pounds (about $350 million USD) for the first six months of 2019. And the company consistently makes money.
WeWork, on the other hand, consistently burns cash and has no expectation of making money "in the foreseeable future" according to its own SEC filing.
In fact, WeWork lost almost $1 billion in the first six months of 2019, putting it on pace to lose even more money than the $1.9 billion it lost in 2018.
WeWork currently has around 10 million square feet of office space, and hopes to grow to 40 million in total.
But Regus already has nearly 60 million square feet of office space worldwide. And it's still expanding.
So Regus is MUCH larger and turns a healthy profit. WeWork is smaller and loses tons of money.
You'd think that Regus would be a much more valuable company. But no. Regus is valued at less than $5 billion. While WeWork is going public at a valuation of nearly $50 billion– ten times higher.
Much of this excess is due to WeWork's legendary silver-tongued and messianic co-founder/CEO, Adam Neumann.
Neumann has actually been able to convince people that WeWork is a technology company, as a way to justify its absurdly high valuations.