posted by mark
on Mon, 09/30/2019 - 11:19
Today WeWork formally withdrew their IPO. A couple of points come to mind in this withdrawal.
- Insiders had super shares – This means those holders received more votes than the “normal” shareholder. The CEO, Neumann (Think Seinfeld!), originally wanted 20 votes for his shares. That was moved down to 10 to 1 which is still way too much. Today, the amount was moved to 3 to 1. Hey, he is already getting a crap load of shares. Why not 1 to 1 like the average investor. He would have already richly benefited from all the other remunerations he would have gotten. Everything about this super share trend works against the average shareholder.
- All of a sudden the backers of this firm are ready to dig in and clean up their profitability. There was no talk of that until they got backlash from the public markets. In other words, if the private backers could have flipped it to the public markets even though there were glaring issues, that’s OK. Wrong….!
- Where is the competitive advantage? How easily can the concept be replicated? I don’t see very high competitive barriers.
- I heard talk of it being valued at 10 B now. That is one big haircut from 45 B. Sounds pretty shady to me. Where there is one roach there are many!
I was glad to see the public markets got smart and “voted” their economic power. The super shares, big losses, increasing losses and weak business models issues have been growing for a long time in IPO’s. The way to stop someone from taking unjust advantage of another is simply to call them out. Just say NO!
