We hope you can join us on Tuesday, November 23rd at 12:30pm ET for our Black Book presentation on WeWork, Inc. (WE), which we are adding to the Best Idea Long list this morning. Our thinking has evolved as we have stepped out of the "REIT box" in analyzing highly-controversial WE. The reality is that the fundamental backdrop for office as an asset class has changed meaningfully and WE's operating model is fundamentally different, so therefore the approach must evolve as well. The math tells us that WE's EBITDAR could more than double y/y in FY22, which given the degree of financial leverage in the model would likely lead to a more than 2x in the stock price from $8.36/share currently. This degree of growth would also likely result in WE hitting Adj. EBITDA breakeven from an EBITDA loss run-rate of well over ~$1.2 billion currently. We will review our approach and math in-depth on Tuesday.
EVENT LINK: CLICK HERE (video, dial-in, materials links)
KEY PRESENTATION TOPICS INCLUDED
- Introduction
- Position Monitor review
- Macro overview
- WeWork, Inc.
- Overall thesis
- The numbers behind the call
- Review of key operating metrics
- Analysis of the SPAC transaction
- WE's path to EBITDA break-even
- Liquidity and cash burn
- Capital structure
- Operating lease adjustments
- Company history, leadership, turmoil, etc.
- Other topics
- Appendix:
- Earnings model
- Q&A
Figure 1: Updated Position Monitor
Please e-mail with any questions.
Rob Simone, CFA
Managing Director
Twitter: @HedgeyeREITs
