As long as a madman jumps out and gives a high valuation, everyone will think that this is a realistic “comparable” benchmark.
Editor’s note: This article is from WeChat public account “Junshi Taibao” (ID: Taibaocaijing), author Li Jun.
In the past month, the market investment style has rapidly changed. The saas sector headed by Shopify, Zscaler, MongoDB, Twilio and Okta has experienced a huge decline. Growth stocks such as Roku, Sea and Pinterest are no longer invested. I like it, and everything may start with WeWork’s valuation.
The “blood case” caused by WeWork
Mike Wilson, the chief US equity strategist at Morgan Stanley, who had successfully predicted that US stocks will enter the rolling bear market last year, has recently caused a stir. Wilson said that the failure of WeWork’s initial public offering marks the end of an era. Investors have shown that they are no longer willing to pay for over-investment. “In our view, the days of generous funding for companies that have not achieved profitability are over. “.”
Wilson compared WeWork’s IPO failure to JPMorgan Chase’s 2008 bankruptcy of BearStearns, which marked the end of over-investment in the first decade of the century. He also equated it with AOL Time Warner’s failure in the worst of the Internet bubble and the failed leveraged buyout of United Airlines, which ended the MBO (management buyout) frenzy in the 1980s.
WeWork opened the IPO road at the end of last year. When the prospectus was submitted in August this year, the company could have raised at least $3 billion through the listing. The plan was met by Waterloo, and the valuation and business model was questioned by investors. WeWork’s parent company We Company had to formally announce the withdrawal of the prospectus submitted to the US Securities and Exchange Commission on October 1 to seek a postponement of the IPO.
In Softbank’s investment, WeWork’s valuation reached $47 billion at its peak, but in the current global economic context, valuations were directly reduced by the market to between $10 and $12 billion, a drop of nearly two-thirds.