SoftBank makes WeWork the 4th most valuable private company

Is WeWork worth a) $42 billion b) $20 billion or c) whatever SoftBank says it is worth? The answer, has to be c) because SoftBank’s latest investment in the co-working group makes WeWork the fourth most valuable private company… But the structure of a $2 billion put forward raises tricky questions. Only $1 billion is being invested at the highest valuation. The rest is designed to let early investors cash out at a lower $20 billion level… WeWork’s valuation has always defied rational explanation. Quarterly revenue is growing but taking on longterm office leases and subletting them is risky. The company has numerous competitors, a model that can easily be copied and is stubbornly lossmaking… WeWork managed to borrow $702 million in public markets last year thanks to a high coupon and an equity valuation regarded as a cushion for bondholders. If the cushion is deflating, WeWork’s cost of borrowing will rise. Prices for the 2025 bond fell to a new low of 86 cents in the dollar on Monday. They will not be bolstered by plans to create three businesses: apartment leases in WeLive, elementary school operation in WeGrow and office leasing in WeWork. Wild ambitions do not constitute a viable business model.