The loss exceeded 1.9 billion and the debt was high.
Editor’s note: This article is from WeChat public account “IPO that thing” (ID: ipopress), author Maxim.
Wework is likely to become the second largest US IPO after Uber this year.
Recently, the US shared office company Wework officially submitted an IPO prospectus to the SEC, code WE, estimated to be available in September. The amount of financing disclosed in the prospectus reached US$1 billion. With the late increase, Wework is likely to become the second largest US IPO after Uber this year.
The list of shareholders is quite luxurious, with Softbank, Morgan Stanley and Benchmark listed on the shareholder list. After the completion of the issuance, Wework’s co-founder and CEO Adam Neumann will own or control more than 50% of the total voting rights to achieve its voting control.
From Mobai, ofo, to shared cars and shared gyms that never get up, people always have a huge obsession with idleness and sharing. After the vent, the wind is gradually fading in the shared market, Wework, the company that shares the office space, can it go against the trend?
1, The loss is over 1.9 billion, can the shared office go through?
Wework, the Chinese name “Zhongchuang Space”, was founded in New York in 2010, when the company’s main target customers were mainly entrepreneurs in New York. As one of the highest rents in the United States, Manhattan City has once become an exclusive gathering place for capital predators, rising in height, and office prices have remained high for a long time.
The emergence of Wework has effectively solved some of the problems of entrepreneurs, and some of the shy entrepreneurs have found their typhoon shelter. But it may be limited to the demand, and since then nearly five years or so, Wework’s performance is not blazing. In March 2016, Legend Holdings and Hony Capital participated in the financing, amounting to 16 billion US dollars. At that time, Wework had spread to 23 cities and heldThere are 80 shared office spaces. As of July of that year, Wework entered the Chinese market and has 11 stores in Shanghai, Beijing and Hong Kong.
However, as a “unicorn” for the sharing economy, Wework’s recent surge in attention is not due to its shared economic model, but to the numerous “exciting” financial data disclosed after the IPO, and the worrying development prospects. .
First of all, losing money, from 2016 to 2018, the company’s net loss soared from 430 million yuan (US$/unit) to 1.927 billion yuan, more than double the annual rate. In 2019, the moderate data loss was 905 million yuan, a year-on-year increase of 25.14%. In the second half of the year, efforts were made to make a double loss this year. Earning is also earning a little, and the loss is mainly due to the loss.
First look at earning, what is the company’s business model? Can you continue to make money?
The business model is straightforward, first of all the membership system. WE members provide basic services, similar to experience cards, users can enjoy 2 days of desk service and 1 hour of office services. After joining the membership, customers can join the Wework member network through the App to work with other members. Sharing and communication.
There are three main rental models, mobile, dedicated desks and dedicated offices. Monthly is 220, 325 and 450 yuan per month. The desk service includes a meeting room that lasts 1 hour, an additional 25-75 yuan per hour, and office services are available in all areas. In addition to office services, the scene service also includes printing, parcel delivery and coffee service, but it is not cheap, print 25 yuan per month, parcels and send 50 yuan per month.
At the same time, it is worth mentioning that the company launched a new service: Welive, as its name implies, directly provides customers with a place of residence or a private studio, with 1,700/person in New York, DC1,200/person, and a private studio that costs hundreds of dollars. But at the same time can also give support to some facilities.
To put it bluntly, Wework as a “charter”, its main operationThe model is rented (and possibly bought) and renovated, and then rented out for temporary residence or office work.
Can it be done? Wework gave a picture in the prospectus.
The yellow part is the construction cost and the blue part is the rental fee. The company surveyed the average monthly business rent in the United States, with an average annual rent of $17,158, while Wework was able to offer a price of $7,304, a savings of about 57%. More competitive under price advantage.
On the other hand, as of 2019, Wework had a total of 604,000 work positions, with a market share of 87.25%, and a single rental income of 4 billion yuan, while corporate customers accounted for 40%, an increase of 10%.
With the expansion of its members, Wework will move out of North America and Europe, and China will become one of the main markets for its next phase. At this stage, only Beijing, Shanghai and Hong Kong have their own stores.
In this context, the company hopes to attract customers with innovative and attractive office space, achieve stable rental remittance with high-adhesive membership system, and make profits, and promote it to the world to realize the revolution of the office industry. Sexual breakthrough.
But there are a lot of problems.
First, its shared business model is yet to be considered. The company is mainly based on membership at this stage, and its customer count is also counted by the number of members. However, the fact is that most members will only experience several times after registration, and will not work for a long time. To experience mainly because of the novelty of the environment and the first free experience, these two points are no way long-termSustained, the first novelty of the environment, the marginal benefits will gradually decline. After all, you are not much different from the elaborate Starbucks. Starbucks will not accept my “office fee.”
At the same time, the number of growing corporate customers mentioned above is basically more than 100, and it is planned to cooperate for a long time. Large groups and long-term office space leasing can bring benefits to the company. However, if we are moving in this direction, Wework will completely become a “charter”. What is the shared concept advocated?
Second, expansion is also a problem. In the Chinese market, as of this example, the vacancy rate of office buildings has climbed to around 20%, which is higher than 16% in the US. Under the slowdown of new supply, the vacancy rate has not been controlled and the net absorption is also significantly reduced. At the same time, the overall rental situation of office buildings has remained stable for a long time, and there has been a partial downward trend in the first quarter of this year. In China, where youth entrepreneurship is only 4.8%, the long-term demand for shared offices is not significant. Flat-managed SMEs plus government subsidy policies will not face excessive rent pressure.
However, for Wework, it’s not a big deal to earn less. The problem is that it costs more.
2, The debt is high, and the “technology” is difficult to reverse.
After earning a look at the flowers, how much does Wework spend?
The largest share of expenses is the cost of operating locations, from 2016 to 2018, with an increase of 433 million yuan to 1.521 billion yuan. “Crazy Circle” made Wework instantly become a heavy asset company. In 2019, the total assets reached 27.05 billion, and the PPE reached 6.73 billion. This posture has continued to develop, and the assets are basically doubled in one year.
Expanding money, drawing cakes and money, old routines.
Hongyi and Softbank’s A and B rounds, $1 billion did not make a sound, Wework still had no money, although on the accountWith 2.5 billion in cash, it still can’t keep up with its pace of expansion. No money is broken. According to market news, WeWork is seeking to raise $3 billion to $4 billion in debt for debt expansion through debt financing before the IPO.
It’s not like Uber who broke the money before breaking it?
At the same time, Wework discovered the conscience and painted the land he intended to circle with the seesaw. On the right side of the upper part, 425K+180K is the open space owned by the company at this stage. Do you see the millions of newly developed venues on the left? The CEO said, I have to.
Speaking of the CEO, it is worth mentioning. WeworkCEO Adam Neumann, who was found to have about 50% of the Manhattan Building, also invested in San Jose, Calif., and his own company, WeWork, has been the leaser of its San Jose property.
I buy my own rent, it means a little bit, you rent me to collect rent, you don’t rent me to appreciate. You may earn, but I will never lose.
Obviously, Wework also realized that the attractiveness of its own company is too weak, and investors may turn around when the cakes are not finished. If you don’t want your business model to be too thin, say you are a technology company. In response to the direction of technology, Wework proposed a shared platform of the concept of “space as a service”. Remember the WE member we said earlier, that is it.
Providing professional education, work, psychology, and life support and guidance through community services, and connecting users through the community to form effective interactions. The prospectus is probably expressed in this way, and the rest of the expression is mostly reflected in human nature and comfort, etc., but it is not said. A total of 25,000 employees, 1,000 engineers, and 2,500 community managers. We are not good at configuration and business. Wework is a technology company, at most it is a service company.
3, In Ruixing, how can I burn my money?
Expansion, loss, US stocks listed. These keywords make it easy for us to think of the recent Ruixing coffee sold by Xiaolu Tea. In the second quarter, the report was out, with a revenue of 909.1 million yuan and a net loss of 680 million yuan. Many people still insisted on meeting expectations. The stock price fell 8.5% on the day, as of yesterday’s closing price of 18.88 yuan. It is quite auspicious.
As of the second quarter of 2019, the number of Ruixing coffee shops reached 2,963, an increase of 374.8%. The money is still burning, but in addition to expansion, Ruisheng has begun to recover the cost. Store operating losses decreased by 31.7% year-on-year, while the number of users has rebounded. In the second quarter of 2019, the number of trading users was 22.8 million, an increase of 686%.
But the interesting phenomenon is that Chinese investors are generally not interested in Ruixing. Most of them are ridiculous and jokes. Indeed, Ruifu always gives himself a flag. Now it seems that it is not the starbucks. Look at the deer tea. Hi tea began to fall into meditation. But the investors in the US market are very interested in Ruixuan. The friends who have seen hundreds of millions of American TV dramas must remember Axe Capital, whose prototype is the well-known hedge fund company Point72. The company just acquired more than 2.12 million shares of Ruixing ADS in early August, which is equivalent to 17.02 million shares of common stock. At the same time, the company cleared Starbucks.
In short, US stock investors know that Rui Xing is burning money, but they are not flustered when they look at the flames, because they think coffee, this fantastic addictive drink will quickly let the people sink. Although they don’t know it is like the deer tea and the milk tea.
But Wework doesn’t have that life.
The high cost and huge debt, US stock investors are watching, this shared office has been no longer new and dynamic.
Private investment in real estate, stick to technology companies, draw a pie-shaped business outlook, all kinds of signsLet investors be discouraged. After all, capital nature is profit-seeking, and secondly, avoiding perceived risks. I don’t know if Softbank, who had been detained against Alibaba, can still be jailed this time, but what is certain is that the market will not be so enthusiastic again this time.