Elliot Brown

speaker

33 appearances 1 recordings 1 series first heard May 2019 last heard May 2019

Elliot Brown’s voice in public audio — every appearance, attributed to the second.

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WSJ Your Money Briefing · Can WeWork's IPO Raise Enough Cash? · 1 May 2019 podcast

Yeah, it's a pretty fascinating company.

I mean, they've been really fast growing over the past nine years they've been around, and especially in the past few years, it's been doubling their revenue every year.

But sort of the other side of that is that they have also been spending an enormous amount of money, and that has been going up just as fast as their revenue.

So when you keep doubling and suddenly you're a $2 billion a year revenue company, then you need to spend $2 billion a year to keep growing more.

So there are only so many places out in the world where you can actually find that much cash once you get that big.

Yeah, what they do is it largely is going into sort of their main product, which is offices.

And so they will lease a building from a landlord for 10 years, 15 years, and then spend a decent amount of money –

renovating it, sort of fitting it out with glassy offices and white subway tile and beer on tap.

And that's not cheap.

And so what they say is that it's an investment for the future because they get to have this lease for 10 or 15 years.

But that doesn't mean that it's cheap.

And so hence the need for more money as they keep growing.

So they've said previously they had, you know, as of the first quarter, around $6 billion, which sounds like a lot.

But then if you step back and sort of think, well, if trends continue—

How long will that last?

And so some analysts at Bernstein took a look at that.

And the number they came up with is basically it'll last through mid-2020.

And that means you're going to need a lot more cash after that.

And so then they have this sort of, you know, everything is an estimate here.

But they have this estimate that by 2026, WeWork will need something like $19 billion cumulatively.

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