How will WeWork’s rapid growth affect their bottom line and why is it making their Bankers and Investors concerned?
WeWork's membership more than doubled last year to 401,000 people subleasing space at its coworking facilities worldwide.
WeWork’s losses are outpacing its revenue as the coworking giant pours large sums of money into investments to develop its brand internationally.
Revenue, largely drawn from real estate leasing activities, more than doubled to $1.82 billion in 2018 from $886 million the prior year as membership surged 115 percent.
But deep investments in expansions throughout the fueled losses that doubled from the previous year, topping $1.93 billion. The network expanded its locations to 425 in 100 cities, up from 200 in 65 cities a year earlier.
Executives of the nine-year-old company seem to put more emphasis on growth than profits and losses.
They’ve been quick to point out that WeWork is sitting on a cash trove that reaches $6.6 billion.
Membership, which is based on the number of people who pay to sublet office space at WeWork’s facilities, jumped 88 percent. However, that percentage gain was lower than the 93 percent in 2017 over 2016.
Occupancy rates also fell to about 80 percent from 84 percent.
SoftBank was expected to sink $16 billion into the network this year that included $6 billion in new funding, but it pulled that back to $2 billion with $1 billion in new funding after investors of its Vision Fund, mostly those from Saudi Arabia and Abu Dhabi, raised concerns about putting more new money into WeWork.
The results could prompt a tougher look at the company's operations by analysts and investors.