Wednesday, September 27, 2023

WeWork’s Market Cap Beats Regus As Market Returns To Reality

  • WeWork’s cash flow is decreasing and it plans to close more sites as it struggles with its recovery.
  • Its market capitalization is now lower than Regus, another flexible space provider.
  • This is a sign that the market rewards careful management over rapid growth.

WeWork was once a company that claimed to be a “workplace”. as the future of real estate.

WeWork is now facing a cash crunch due to declining users and costly long-term leasings. This comes as the company watches as its market capital plummets from $2.3B in December to $1.35B by Wednesday’s close.

WeWork’s problems are stark contrast to Regus, a company that offered flexible workspaces for many decades before WeWork entered it:

After being forced to sigh through articles such as “The Company’s Market Cap” (now $2 billion), the company now has a market capital of $2 billion. “How did WeWork beat Regus?” In 2019.

WeWork expanded quickly under Adam Neumann, before investors began to become concerned about the growth strategy. Neumann’s death. ousterWeWork was unable to realize its goals. 

From July to September, the company had negative cash flow in excess of $4.3 billion. The Wall Street Journal. WeWork was able borrow from Softbank, its largest investor, to keep it afloat. However, the bank has lent more than $10 billion to the bank. WeWork claimed it would end the fiscal year with $300 million cash. This is less than a third of the amount it had at 2021. 

Regus, owned and managed by IWG Group, experienced many of the same challenges as WeWork. Since WeWork started publicly trading, Regus’ parent company has outperformed WeWork.

Regus is not alone in its struggles. Regus, as with most office space owners, has suffered from the pandemic. In 2021, Regus lost $254 million and generated $2.7 billion in revenue. But compare that to WeWork, which lost ​​$4.4 billion on $2.7 billion in revenue in 2021, pulling of the dubious feat of having operating expenses nearly double its revenue. 

Regus was a more professional and utilitarian approach to coworking spaces, while WeWork opted for a more casual approach to coworking spaces to attract customers. Regus had a coffee maker. You get kombucha straight from the tap when you use WeWork.

IWG and Regus did something right in a sign ReutersIWG reported that it purchased several WeWork locations from London and New York in 2021 as part the company’s ongoing series of coworking spaces. 

WeWork is working on a similar project. shutter some of its sites to control its spending faces the real possibility of defaulting on its debt.

Regus faces a steep climb in an environment where the future of the office looks uncertain. Regus’s focus on the fundamentals and not on growth means that the market values it higher than WeWork.

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