How Can a Company with $1.8 Billion in Revenue Lose $1.9 Billion? WeWork Shows How

The financial world has gone nuts.

WeWork isn’t a publicly traded company yet and doesn’t have to disclose financial information to the public, but it issued bonds in April 2018 and has to show its hapless bondholders some figures about its financial performance. WeWork made this presentation available to the financial media, including the Wall Street Journal and Bloomberg. The four standout numbers that were reported:

  • Revenues in 2018 doubled to $1.82 billion
  • Losses in 2018 more than doubled to $1.93 billion.
  • Occupancy rate in Q4 fell to 80% from 84% in Q3, meaning it expanded its spaces faster than it could fill them.
  • The average revenue per “member” per year fell to $6,360, and is down 13.5% from the start of 2016.

For a nine-year old global company, generating larger operating losses than revenues is an art, takes some doing, and requires full connivance of the investors whose money this is – but really all they want to do is sell the thing to the public at a huge valuation and wash their hands off it.

The company, instead of being able to stand on its own self-sustaining business model after nine years of operating, is buying growth at a very high price that appears to be getting higher. But…

“We’re sitting on well north of $6 billion in cash,” said WeWork vice chairman Michael Gross. “We have access to a lot of capital in a lot of pockets and we have a big opportunity ahead.”

In other words, it sits on these billions it has extracted from investors, and it’s going to burn them, and when it goes public via an IPO, it will extract more billions from investors and burn them too. It will burn billions and billions until the day investors balk.

The hapless bondholders are already stewing. In April 2018, WeWork’s issued $702 million of 7.875% notes due in May 2025. S&P rates them B+, four steps into junk (corporate rating scales by S&P, Moody’s and Fitch). And Moody’s, in an unusual move, withdrew its credit rating of the bonds last August, citing “insufficient or otherwise inadequate information.” The bonds have been in the red for almost the entire time and closed today at 91.25 cents on the dollar, according to FINRA/Morningstar data.

In January, the company rebranded itself as the We Company to make room for other businesses it is setting up or acquiring, including an elementary school (WeGrow) and furnished apartments (WeLive). But 93% of its revenues come from its 400,000 “members” that are renting desks in shared and flexible office spaces.

These losses of nearly $2 billion in 2018 are operating losses, and not investments in new office projects. After the company leases office space and decks it out, it takes up to 18 months to fill the space, and during that time, the space produces lots of expenses but revenues start out at zero and grow only gradually until the space is filled. That’s the price of expansion.

But then there is a lot of churn, as “members” might not need that desk for all that long, and WeWork has to work furiously to find new “members” to rent those desks, and that involves a lot of expenses as well.

So the company is burning through cash by the ton. Its biggest investor is Japanese conglomerate Softbank. In January, Softbank agreed to a $2 billion deal of which only $1 billion was new funding. But that was down from an initially hyped $16 billion deal with $6 billion in new funding. Previously, WeWork had signed $4 billion in deals with Softbank, a $1 billion convertible note and a $3 billion warrant.

But WeWork is just one example of a company that has been around for a while, has thousands of employees, loses ballooning amounts of money and now wants to go public.

Lyft, a six-year old company, is the first one on the IPO schedule, happening even as we speak. Slack, Uber, Palantir, Pinterest, and the like are lining up in the wings. Just about all of them are powerful cash-burn machines. Pinterest is the exception, having lost only $63 million in 2018. Lyft lost $911 million in 2018. According to S&P Global Market Intelligence, Lyft’s loss set a record for any company in the 12 months before its IPO.

Uber has been losing about $800 million a quarter. When it goes public sometime this year, it will beat Lyft’s record. If WeWork goes public before Uber, it will beat Lyft’s record first, before Uber will beat WeWork’s record. So this is going to be a glorious year in the annals of gigantic cash-burn machines – and the simple fact that investors are clamoring to supply huge amounts of fuel for these cash-burn machines is a sign that the financial world has gone nuts.

And on a more global scale of a financial world gone nuts – read… The Countries with the Most Monstrous Corporate Debt Pileups. US Wimps out in 25th Place!

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  108 comments for “How Can a Company with $1.8 Billion in Revenue Lose $1.9 Billion? WeWork Shows How

  1. Chemdude says:

    But… but… community adjusted EBITDA, aka earnings before everything!

    Sam Zell had a recent comment or two on the We Company’s business model.

    What about those “arms-length” transactions that the CEO negotiates with himself, the landlord…

    • Lemko says:

      Hahahahaha Wework is the con of all cons… He got debunked so hard it wasn’t even funny how bad he’s pissing on his investors. He buys buildings with salary made from Wework, leases them on a 10 year basis to Wework, whether there is tenants or not, Wework always pays him every month on time so he builds Equity in his buildings regardless of his business flopping or not. Doing all that while losing money left and right the whole way, paying 11 % Interest in Junk… Losing 4.9 Million a day in a RE Business

      Masayoshi seems to have a strategy where he massively over-inflates his Investments in the VC Industry, to be able to get more funds to keep his buying spree. Under Softbank portfolio they have Wework valued at 40 Billion, so on paper wework adds 40 Billion of ” Assets ” to investors in his fund, but it’s not even close to being liquid. Let’s say 200 Billion in debt, it’s alright cause fund has 400 Billion in ” Assets “, numbers aren’t exact but that’s the idea

      Josh Wolf went on Real Vision, Episode called Venture Capital Gone Mad, very good video, explains the shenanigans in VC/PE Industries, Softbank and others who engage in this fictional Assets to Debt scheme will get obliterated once reality sinks in… WeWork valuation on SoftBank’s sheet will go from 40 Billion to Building Assets that aren’t in owners name, considering amount of Debt, valuation will end up at 0, guessing Bonds are seniors

      • Rob says:

        Do insiders own buildings they then lease (at offf market rates?) to WeWork? What are the hurdles for a RICO case when it collapses? Money laundering and wire fraud are 10-15 year stretches.

    • Joan of Arc says:

      If you owe Softbank 1,000 dollars you have a problem. If you owe Softbank 1 million dollars then Softbank has a problem. – from John Maynard Keynes

      • Blockhead says:

        Correction: If you owe Softbank a million dollars, you have a problem. If you owe Softbank a billion dollars, Softbank has a problem. It’s called inflation.

  2. DumpusBagus says:

    The investors see the writing on the wall and trying to dump their bags onto people who will blindly buy.

    Good times, Good times.

  3. SnotFroth says:

    Well if the Fed isn’t going to drain and destroy money from the financial system via QT, then WeWeork et al will through their business models.

    At least some of the money should end up in the real economy through the companies they hire to renovate and upkeep their properties. I salute WeWork investors for their unintentional patronage of the working schlub at the expensive of their financial portfolios.

  4. timbers says:


    You’d almost think a lot of excess liquidity is out there flowing around looking for anywhere in hell to park. How’d that happen?

    But nothing to worry about….

    Because Janet Yellen said the Fed should cut interest rates because Mr Market has commanded it to be so and Mr Market always get his way.

    Count down to MOOOOREEEE QE and 0% interest rates has begun.

    I got a hearty laugh at the WolfStreet Report suggesting the Fed would not cut rates in a slowing economy. True or not, doesn’t matter.

    Because the one and the only thing that does matter is what Mr Market commands.

    And Mr Market will command more QE and rate cuts and we already know Dat Fed will Obey.

  5. chris says:

    All these investors are just subsidizing the WeWorkers and Uber users etc, so as their billions evaporate that’s fine with me. Now, if they IPO, they get many many more billions, but that is the problem of the fools who buy the IPO. It’s a huge, awesome transfer of wealth from fools I don’t know who lol. Like Wolf said, the financial world has gone nuts.

    • Petunia says:

      It’s not just the fools who buy the IPO that get hurt. The transaction serves as a comparable for the rest of the crap that comes to market. It’s all by design, an asset creation factory/fantasy.

    • John Taylor says:

      If you think about it, that’s pretty much the same as saying go for it Bernie Madoff, buyer beware … the main difference is that the modern systemic financial scandal is legal, so those orchestrating it will stay rich, avoid jail, and generally be considered citizens of good standing. The final bagholders will likely a bunch of pension funds, that’s usually the case.

      • Mike Earussi says:

        Every time I see another money losing scheme by some crooked businessman I get angry thinking of all the small people they are stealing from.

        My friend’s retirement fund has already been cut 30% because of bad investments on the part of the fund managers. It’s not the people who manage the funds that get hurt it’s the retirees who depend on them that are hurt.

  6. Howard Fritz says:

    The teslas, Ubers, Lyfts, movie pass, heck even Netflix are all the creation of central banks and their insane interest rate repression, has caused zombie companies to dominate the economy.

    Why be a prudent manager when “endless” expansion can be fueled by “endless” credit? Afterall we live in a fantasy world where we can print ourselves into prosperity.

    It seems CEOs are only concerned with two things cash flow and stock price, how we see how that is accomplished.

    What happened, to managing resources with an even hand and growing in a sustainable fashion or am I completely off the cuff here folks.

    • Joan of Arc says:

      “It seems CEOs are only concerned with two things cash flow and stock price,…”

      I think you need to change that to “negative cash flow and stock price”.

    • HowNow says:

      Mr. Fritz… you and many here lay all the blame of investor idiocy on the Fed, a convenient straw man. How about the multitudes of ninnies who can’t wait to buy into these IPOs? And the hype surrounding these launches? It’s been going on for eons, so, it isn’t the Fed, and it isn’t recent. It’s investors, it’s the system, it’s the “get rich quick” phenom. Best example was in the late 1990s: the brokerages would give you small entry into a tech ipo FOR A PRICE – you have to buy something like a junk bond, or some recommended stock or fund… That’s because the demand for IPO crap was so intense that they could extort the dumb-as* investors who could hardly wait lose their shirts in the spin cycle. It’s too easy to blame the Fed. It’s the bimbos that keep the racket going. If people were to tell their pension officers to stop buying crap, through their representatives, this may correct. But since most of the muppets are busy eating burgers, worshiping populist leaders who made their fortunes fleecing the public, and watching videos of pets falling down flights of stairs, they have no time to act or think responsibly.

      • Mike Earussi says:

        There have always been crooks taking advantage of whatever the financial conditions are at the time, the easy money from central banks have just made it easier for more crooks to flourish. The Central Banks easy money policy has become the enabler for increasing corruption.

      • Juanfo says:

        The USA has the planet’s most desired currency. The printers can’t even keep up with worldwide demand for dollars. There is demand. The USA should continue exploiting this currency market for its own advantage.

  7. Eamonn Harter says:

    One word: Regulation. We need it. A simple rule would suffice to eliminate this issue of cash-burn machine companies selling shares to the public: You must show at least 3 consecutive fiscal years of positive net income as a private company using GAAP before being listed on an exchange. The fact that Lyft and WeWork can legally sell shares to the public is just plain wrong. IPO = insiders’ private opportunity

    • Jessy S says:

      Except governments are more concerned about legit people jumping through hoops just to run a business. For example, a contractor likely has a ton of work and that is before he gets to build their first house.

      And then there are the kiddies who get shut down because they needed a proper permit just to sell lemonade. What’s next? A $250 permit just to make $120 in a garage sale?

      • Petunia says:

        People who work in govt, as a general rule, don’t know how businesses operate. They get a budget to spend every year and can always go back to the well. They don’t understand that revenue can be a problem. This is a long way to say, don’t expect them to fix this.

        • Jessy S says:

          And there are tales of government waste in the federal government. This includes the Pentagon which has a history of spending $350 per hammer and $299 per screwdriver. The Simpsons even had an episode where Homer spend his department’s entire yearly budget in one month.

        • 91B20 1stCav (AUS) says:

          Totally agree, Petunia. But, in addition, the surviving financial regulators (their numbers having been ruthlessly cut since the Reagan administration) are even more likely to pursue only the low-hanging fruit, i.e.-, average, small-time, generally law-abiding citizens, than before. Not hard to understand, when your job is to show some kind, any kind of result to justify your efforts. To reprise R.A. Heinlein: “…The man who goes broke in a big way never misses a meal. It’s the guy who’s short a couple credits who has to pull his belt in another notch…”. May we all find a better day.

      • Juanfo says:

        They go after the low hanging fruit.

    • Paulo says:

      One word, “guillotine”. That’ll stop the BS. :-)

      • ArcticChickens says:

        It’s coming, one way or another. The discontent I see and hear in people around me is slowly turning more and more radical. As the saying goes, something’s gotta give eventually.

    • ps says:

      What if you want to invest in crazy new technologies that disrupt backwards industries (like real estate)?

    • Just Some Random Guy says:

      Nobody is putting a gun to buyers’ heads. If someone is dumb enough to buy shares in this POS, let ’em.

    • John Kennard says:

      You might start by making that a fiduciary requirement on the part of buyers investing others’ monies (pension-funds in particular).

      Although that would smack of ethics
      and might threaten fund-manager compensation.

  8. Javert Chip says:

    I guess I’m ok with wealthy investors taking a flyer, or massive hedge funds “diversifying” into Uber, Lyft, We, etc.

    However, Joe Six-pac and millennials who “invest” in these…let’s call them what they are…gambling schemes, probably aren’t just “taking a flyer” – they’re investing relatively substantial portions of their total accumulated capital.

    It’s hard to listen to this same crowd complain about failure to get rich.


    • Jack says:

      Well Jav , they did it before with bitcoin!

      Yet the ones that see the light take their losses and ( a big hard lesson) .

      And what lesson is there to be learned?

      It’s ( if you invest in any financial scheme that can be ultimately controlled by the big guns, read hedge funds, venture capitalists, etc..) you’ll get burned… badly.

      The blind ones though, the ones that some call true believers .. die on their crosses, the cross of greed and ignorance!


      • Javert Chip says:

        Bitcoin (any crypto) is exactly what I was referring to as gambling.

        However, you are correct in that people walk out of Vegas casinos every night as winners. Well, probably 20% of people do. The rest paid a few hundred dollars to have what they consider to be an interesting night of entertainment.

        Any resemblance between gambling and wealth-building is purely coincidental.

    • Setarcos says:

      I was a young investor long ago and there is not a substitute for losing $ as a learning experience. Invaluable for later in life when hopefully the stakes are much higher.

      Friend of mine was CEO of a brokerage firm in the late 90s. Told him I had sold most of my equities because some of the tech IPOs and valuations were ridiculous. He said I was nuts to sell. He was 20 years my senior, and an “expert” so I listened to him ….sold all my bonds and bought back in just in time for the dot com crash.

      Thankfully, I had the freedom to make that poor choice, learned a ton from it and have benefitted greatly from the experience. The people who would protect me from that poor choice would have robbed me of one of life’s best lessons and a great deal of money.

      • HowNow says:

        I enjoy your comments, usually, but this last one, on life’s lessons, is a bit contorted. Are you suggesting that being burned is better than having an adult – aka: regulator – protect you from your own ignorance? I’d say that’s Rationalization (with a capital R) and is code for “ain’t the ‘free market’ grand?” If there were genuinely free markets, we’d either be slaves or our predecessors would have been eaten by now. I’m not suggesting that we (humanity) can stop “natural selection”, but I do think that some regulation, some effort to curb exploitation, externalities, and failed markets, should be enforced. It’s about balance and human decency, not “free markets” that let the ignorant suffer any and all consequences and justify it by arguing that they’re better prepared for the “future”.

        • Setarcos says:

          Effective regulation requires a lot of integrity and expertise and I rarely see evidence of either. Regs are also incredibly expensive (a hidden tax) and paying a lot for ineffective rules is not a good use of money I have worked for and saved. Regulations are generally bought and serve to incent very large corps at the expense of smaller and better companies. We pay for reg’s designed and paid for by the very corps we want protection from …and wonder why the results don’t change. Anyone running a small business understands the absurdity of it. Believing that regulators are more virtuous in their goals than those they regulate is a false belief. I could go on an on. Some reg’s are good, but too much of a good thing is not good.

          The US continues to lead because of tech …imagine if 30-40 years ago we had regulated the heck out of tech. Are there some warts, sure, but are we willing to roll all that productivity back to avoid some warts?

          So, some fundamental reg’s, sure, but endless reg’s under the guise of “protecting”, no thanks. Enforce basic reg’s with a firm hand, actually lock people up, etc.

        • Setarcos says:

          I should added that we are probably not so far apart on this. Franklin said someone willing to trade freedom for security would soon find they had neither.

          You also drew a parent, child analogy. My parents enforced basic rules rigorously and left the rest to me. Some of my friends had micromanaging parents – those kids had very difficult transitions into adulthood. Some never transitioned come to think of it.

  9. GuiriCateto says:

    In USA corporate he sell NIRP to WS, in EU government he sell NIRP to voters, an Japan he sell NIRP to self.

    • Javert Chip says:

      With all due respect, I cannot understand what you are saying.

      Your English is tortured and I said nothing about NIRP.

      • HMG says:

        I think GC means “sell nil interest rate policy to Wall Street ….”
        His comment seems quite clear to me and his logic makes quite a bit of sense.

        JC, am I missing something ?

  10. CRD says:

    Several years ago I worked for an SF-based startup that had a space at one of WeWork’s SF locations.

    When I would go to the “office”, I noticed that many of the offices/rooms were occupied. Some had the logos of big companies (if I remember correctly Bloomberg comes to mind), but a good number of them were empty every time I visited.

    My assumption was that these companies were simply renting at WeWork for flex space that (apparently) wasn’t really needed.

    I haven’t been to a WeWork facility since then. Maybe the situation has changed, but it occurred to me at the time that if and when an economic downturn came, the WeWork rentals would be easy cost-cutting targets for these companies.

    Based on my experience, I think vacancy rates might not tell the full story. What I’d love to know is how many of the rented spaces are actually being used on a regular basis.

    • Joan of Arc says:

      In about 1989 Shopko built a store in my neighborhood. When I entered the huge store shortly after it opened I was impressed by the size of it and all the stocked merchandise. The only problem is that we were the only 2 shoppers (visitors) in the store. As I walked around I predicted that with K Mart across the street and Grand Central on the corner the store would be bankrupt in a couple of years. They just filed bankruptcy earlier this year on January 16, 2019. My prediction was off by almost 30 years. I am thankful that I did not by long term puts on the stock at intervals every 3 years. The K mart across the street is empty and Grand Central was bought out and eventually became owned by Kroger as a Smiths grocery store.

      • Joan of Arc says:

        I wanted to add that my thoughts at the time were how can a store with thousands of square feet of nice polished floors, millions of dollars of inventory, employees walking around and standing at the checkout counters…the cost of it all with no customers around…dead empty…how could it possibly survive for more than two years? They would have to sell thousands of dollars each day just to pay the light bill let alone the lease, help, and inventory expenses. Answer: The store lasted for 30 years and will be closed this year.

    • Arizona Slim says:

      I’m writing this comment from the only surviving coworking space in Tucson, Arizona. What CRD observed could be copied and pasted and applied to this location.

      And, sotto voce, one of the biggest offenders in the “leased but empty office” category was …

      … Uber.

      They had one of the roomiest offices here, but, as for signs of habitation, weeks would go by. I couldn’t imagine why the company kept spending megabucks on this office when it obviously wasn’t needed. Finally, in July 2017, Uber left.

      And here we are in 2019. A lot of vacancy here. Not just office vacancies, but empty desks. Management is trying their best to fill them, but that isn’t an easy job. Because it’s not like there’s a shortage of commercial space in Tucson.

      From where I sit, I can see three vacant offices, four vacant desks, and one leased office that is seldom used. One of the vacant offices has been empty last October, and who knows when it will be occupied again.

  11. Phoenix_Ikki says:

    All these massive cash burning pre-IPO start up really reminds me of a cult. Especially WeWork, have you seen one of their event video? Tons of believers willing to buy into the hype. Yes please sign me up to open office space, something that most people already hate from overzealous corporate adoption. Then again in a cultist environment, if you package a turd with nice wrapping it becomes the next change the world big idea. Pre-IPO hypetrain investors buy into future explosive growth fantasy much as Scientologists believes in Xenu…scary financial time indeed. Snake oil salesman has been around for a very long time, only now it operates on a much larger scale.

    • Javert Chip says:


      re your opinion of WeWork (or whatever their name is this week), you are either a harsh & judgmental person, or you completely overlooked WeWork serves beer.

      As long as other people were paying for it, personally, I’d take the beer.

      • Phoenix_ikki says:

        haha you’re probably right…not much of a beer drinker myself but you do make a good point..those beer sure can serve as lure to the followers.

        As for harsh & judgmental, I prefer to the label of being “I am being too negative” as my dad would like to say whenever facts are brought up.

  12. Sam says:

    Shame on investors for fueling this speculation. Why are we still buying stock in companies that issue dual class shares. I am looking at you Lyft. 20 voting rights for every Class B share held my founders. And we wonder why bad business models are getting out of hand. This game of musical chairs ends with someone falling on their derrière. Can’t wait for the markets to correct err crash.

  13. Harvey Cotton says:

    When I was in San Francisco, my friend and I went to a tea house in The Embarcadero and bought a $25 kettle of tea. They told me that it came from a tree that only grew in a fifty square mile region in China, and blossomed only once in seven years and that, yes, this very tea came from those rare and beloved dried flowers.

    I drank the tea, and the flavor profile may as well have been boiled dandelion leaves. It was a total and complete waste of money, but at least they told me a glorious story that I will always remember. WeWhatever and Tesla and Uber are like that. They may not make money, but they tell a great story.

    • Michael Fiorillo says:

      It’s true, Uber does have a great story: “We lose billions subsidizing riders, while impoverishing our drivers and destroying local mass transit.”

      • sierra7 says:

        I do not disagree with you; but, most people that use uber/lyft etc., could care less of how impoverished the drivers are or whatever; they just want to get from point A to point B. I have grandchildren/ex-wife that swears by them and use them all the time. It’s all about $$/convenience and who cares what is left behind?? This is int the SF Santa Clara Valley areas.

    • Mel says:

      I lately read _The Gilded Age: A Tale of Today_ by Mark Twain and Charles Dudley Warner []. It’s very long, but somebody who has the time could check out the antics of “Captain” Sellers as a promoter of schemes.
      Plus the last third of it is about Congress, and is interesting for other reasons.

  14. nick kelly says:

    The cannabis space also remains a vision of financial pipe dreams, but some of the smoke is clearing.

    In the last week of September 2018 I had a piece on Wolf Street about the irrational exuberance surrounding Canadian grower Tilray, which happens to have its HQ and a production facility in the city where I live Nanaimo, British Columbia.

    Here is a quote:

    ‘By September 19, it briefly reached $300 a share, up 1,660% from its IPO price two months earlier. The market cap approached 29 billion, making it more valuable than Clorox, though it had only $17 million in revenues in the first half of 2018 and generated a loss of $18 million.’

    Yesterday’s (Mar. 24) close was about $68 US.

    Another big Canadian player, Aphria, gleefully announced a few days ago that it had cut it’s cost of production to just 7 dollars a gram!

    In Uruguay the first country to legalize pot, it sells at government licensed dispensaries for 1 US dollar per gram.

    A feature of the eco-sphere is that every country sees itself as the next giant exporter to every other country. Canada imagines it will relive the glory days of Prohibition.1, when it was illegal to have a beer in the US for 14 years.
    Most recent player with big ambitions: Jamaica. The spokesperson says
    they have lots of sun there and don’t to grow under lights like Tilray.
    She also thought that ‘Jamaica’ itself was a powerful branding tool, like Jamaican rum.

    One major target for export: Canada.

  15. Martin says:

    Major North American City: We Jerk errrr Work offices – almost double the rent of competitor, private landlords, mimicking the business model, but providing simple, private ownership to sublet office space. Almost half the price. I worked for various small start ups etc. No one was dumb enough to pay inflated We Jerk rates. We just shook our heads.

  16. xear says:

    It’s a wonderful business model. You simply sell $1 bills for 90 cents to gain market share. Once you have a billion customers you raise the price to $1.10 and start making money.

    • Andy says:

      But in WeWork’s case with 400K members and $1.8bn revenue equals $4,500 pa each member.
      And We Work costs are $3.7bn or $9,250pa each member.
      Do you really think members will hang around when prices double?
      I think not.
      And that will only get WeWork to B/E.
      WeWork is totally doomed. Should never have got this far.

      • Arizona Slim says:

        Slim here. Still writing from the only surviving coworking space in Tucson, Arizona.

        Are members sensitive to price? Oh, boy howdy, are they ever. Matter of fact, price is one of THE big reasons why people decide not to join. Or why they leave. This is especially true among the freelancers. They tend not to last long here.

    • Jessy S says:

      Try explaining a $100,000,000 loss to investors.

  17. Andy says:

    We Work, Lyft, Uber etc see the coordinated global slowdown coming and know the CB cheap money game is up.
    They want out.
    Lets see if they can do it before it all crashes.
    If they can Caveat Emptor is the only thing to say.

    • Setarcos says:

      Inversion for 4 days on 3 month, 10 yr. This has been accurate recession predictor 9 of 10 times.

  18. Keeper Hill says: at least had that cute puppet.

  19. tom says:

    None of it is surprising. Just saw a survey that said 4 out of 5 taxpayers would rather pay to much to the government….so they could get a “refund” in the spring.

    • JoAnn Leichliter says:

      Yeah, thatbbn is pretty silly: giving Uncle Sam an interest-free loan. Unfortunately, that is the only way some people are able to save.

  20. Lion says:

    Just hope these investors aren’t betting pension funds on these cash burns………..

    • Bobber says:

      Well…the Fed is directing them to do just that.

      • HowNow says:

        When and where, Bobber? Any evidence for that claim about the Fed directing investors to buy these IPOs?? Did you skin your knee? Was it the Fed’s fault?

        • Bobber says:

          So you don’t the Fed is encouraging speculation by investors? Do you follow the stock market?

  21. Henry Gondorff says:

    The “millennial” writing for the WSG will tell you that she/he understands this, and all about how they are oh so happy and how this is the shape of things to come. Then, after the crash, she/he will understand it, but won’t be happy.

  22. Yellin' says:

    Anyone with an ounce of common sense can see the financial world has gone nuts for years now. How come the Fed can’t?

    • HowNow says:

      Yellin’, the Fed isn’t empowered to change diapers. They can’t make everything right. If you haven’t been watching, it’s Congress that’s the broken branch, not the Fed. But keep on keepin’ on, go ahead and blame the Fed.

  23. Rcohn says:

    Earlier this week the local San Francisco tv stations covered a demonstration by LYFT drivers , who were complaining about how much their incomes had declined in the last few years. They demanded that LYFT reduce their %70 take.
    Sounds like a recipe for larger work stoppages and labor demonstrations in the future.
    If LYFT is currently losing money under the current pay structure , what will happen in the future , if workers are paid a greater % and localities impose larger fees and taxes on these companies?
    The simple fact is that many of these Silicon Valley companies will NEVER make money and will destroy the equity of those who invest in any IPOs. I do not know what the catalyst is going to be , but accompanying the losses of tech equity, prices of housing in the SF Bay Area will also be obliterated.

    • Harrold says:

      Lyft & Uber were based on the preposition that taxi cab companies where bloated corporations filled with fat to be cut. This was never true.

      In fact, Lyft & Uber have become bloated corporations filled with fat to be cut.

      • nick kelly says:

        Just before Uber arrived in NY the cost of a taxi medallion was about one million dollars, creating an artificial shortage. This was Cohen’s father- in- law’s biz, financing and leasing medallions.

        The drives were almost never the medallion owners. And the latter were fat, exploiting drivers and users via the artificial shortage.

    • two beers says:

      ” […] prices of housing in the SF Bay Area will also be obliterated.”

      But that would curtail Wall St expenditures on yachts and penis enlargement surgery, so the Fed will surely step into to prop up real estate once again.

      Hopefully, the next time the Fed bails out Wall St, the Tea Partiers and Occupiers will realize their common ground and join together in opposing the Wall St-Wash. DC crime syndicate, and ignore the decrepit political duopoly and allied media propaganda apparatus which divert peasant rage against the plutocracy into dead-end social issues.

  24. Old Engineer says:

    How can they lose. When they go public they will have the Central Committee lowering interest rates and doing QEs to enable them and other companies to keep their stock prices growing while their profits sink. And these low interest rates will also allow them to pay dividends while losing money. It’s a @#%$ing goldmine. Not much incentive to make any money and little incentive to make very much.

  25. Bobber says:

    Everybody knows the odds are stacked against them in Vegas, yet people still gamble. Investing in WeWork is no different. The stock market currently serves peoples’ addictions.

    Companies are making tons of money off gambling and dopamine addictions today. Amazon gives you that cheap shopping high. Facebook and Instagram give you the ability to show off and get “liked”. Money losing start ups like Lyft and WeCompany promise you a gambling thrill with feedback. Big media provides the venue for political and sexual voyeurism, where you can see 79 year-old billionaires get busted for hand jobs and presidents flirting with indictments. One could argue the Trump presidency fulfills a base desire for a bored population to gawk at strange events as they unfold.

    The high flying companies have simply figured better ways to pander. Then we wonder why GDP growth is slowing and social fabric is coming apart.

    • HowNow says:

      Bobber, my criticism above is misplaced. I agree with this latest comment of yours almost completely. My apologies… but the Fed ain’t the entire problem. If it weren’t for greed, Vegas would be a desert outpost, Wall Street would be a street in NY, and Americans would mind their knitting and not elect con-artists.

  26. Thor's Hammer says:

    The fundamental rule of personal finance in 2019 is “he who dies with the most toys without paying for them wins” Works the same for start-up shell game companies and IPO’s.

    Once upon a time there was a Bay Area venture capitalist name Tom Perkins. His VC company took a flyer on Google at an early date, and coasted through the future on the winnings. His lifetime goal was to own the largest sailboat in the world and use it to take a pass around San Francisco Bay to rub his success in the face of his peers. Once he had done that life lost it’s savor, and he died not long thereafter. Success or a wasted life?

    • Unamused says:

      => Success or a wasted life?

      If all you’re interested in is money, a wasted life is success.

      His big mistake was thinking that a sailboat is a status symbol to be flaunted, which is contrary to its purpose. It is a means to burst all links of habit, there to wander far away, on from island unto island at the gateways of the day. Larger constellations burning, mellow moons and happy skies, breadths of tropic shade and palms in cluster, knots of Paradise. Never comes the trader, never floats an European flag, slides the bird o’er lustrous woodland, swings the trailer from the crag; droops the heavy-blossom’d bower, hangs the heavy-fruited tree – summer isles of Eden lying in dark-purple spheres of sea.

      That’s what a sailboat is for. Some people just don’t know how to be happy, so they simply waste their fleeting lives making a lot of useless money and dock their yachts at Port Vauban until they rot and have to be towed out and scuttled.

      • nick kelly says:

        The larger a boat, motor or sail, the less you are experiencing the water.
        Over 60 ft, why not just take an ocean liner.

        • Unamused says:

          Because ocean liners have tight corporate schedules and intrepid seafarers don’t bother with calendars or clocks, not even for navigation anymore, now that they have GPS. Besides, they’re loaded with nasty people who are convinced their shit doesn’t stink and like inventing opportunities to prove it.

      • Thor's Hammer says:

        Hate to burst your bubble vision of the free, wandering Sea Gypsy. These days ordinary escapists in Clorox bottle sailboats are Modern People, so they find sailing out of range of wireless internet and their “smart” phone so unbearable that they cluster in places with a strong signal and never leave. Almost all production sailboats have been stripped of things like berths that are usable at sea or galleys that function in favor of cockpits that party 10 and allow instant swimming off the back.

        If you do encounter someone who fits the sea gypsy mold they will inevitably be French.

        • Unamused says:

          I’ll never tell.

          Tatou te o malaga taeao. Fai ln ia, ua lelei le matagi. ʻOu te toe foʻi mai lava.

        • HowNow says:

          Thank you, both, for the “magniloquent” start to my morning. I’m a landlubber but enjoy renderings (verbal and pictorial) of sailing vessels.

      • HowNow says:

        Unamused, the ancient mariner of Wolf Street.

  27. Olivier says:

    Wolf, I am surprised about Palantir: I thought it had a solid (if questionable, some might even say disreputable) biz model selling “intelligence” and assorted services to government types in many countries. Are its numbers really that bad?

    • Wolf Richter says:

      They’re not telling us except for tidbits here and there. So you’ll find out when they file their documents. But probably not as bad as Uber’s of Lyft’s.

  28. Bill Williams says:

    Begging your indulgence, I wonder what anyone here knows about Todd Tressider of Financial Mentor. I have used his calculators and they are very useful.

  29. Unamused says:

    It’s said you can’t cheat an honest man, but really, there’s no law against it. First you’d have to find one, and Diogenes couldn’t do it, so maybe there’s no need for that law anyway.

    Financial scams are apparently legal so that con artists will have a way to support themselves. For all you know, it’s the only thing keeping the country from a permanent depression.

    The business of America isn’t business. The business of America is giving America the business.

    I only deal in enforceable contracts. Keeps my inbox clutter-free.

    • Bill Williams says:

      My thoughts on your comment are that in my experience in accountancy, integrity and honesty are punished very harshly. A “good accountant” like a “good lawyer” has to be creative in helping the client dodge the law. I have been fired multiple times, or eased out, for saying no, with the accompanying result of not being able to use the employer for a reference–honesty and self-preservation are a career killer. Our government officials keep their jobs by enabling each other, while whistleblowers end up dead or in solitary confinement. The business of America is indeed giving America the business, at every level, no matter how much one political party flaps their hands and goes through the motions.

      • nick kelly says:

        The guy who blew the whistle on Duke is ok. Payout of 33 million from Duke’s fine of about 150 M.

      • Unamused says:

        Bill, I could tell you stories that would make you want to hide your family in an attic and just hope they never find you.

        An American will sell out their grandmother for an inheritance, something they learned how to do by reading Agatha Christie mysteries. Success in America requires you to lie reflexively, expansively, and endlessly, and if you are devoid of any redeeming characteristic, can push people’s buttons, have zero expertise, a trove of childish insults, brain damage and/or willful ignorance, a wife who lets you cheat on her, and a deal with Satan you can cheat on later, you too can rise to the very top in politics as well.

        No, really. I would not kid you about such a thing.

        In classical Athens, honesty was considered a severe personality defect, which they dealt with by allowing infanticide up to a very late age. In ancient Sparta young men were deliberately starved to force them to steal as part of their training, and were beaten to teach them to get away with it. One hid a stolen fox under his tunic while addressed by an elder, and as it chewed out his pancreas he grinned so as not to give himself away. Thusly, when the fox gnaws, smile. He is still acclaimed a hero.

        By not in Sparta. There’s nothing left of it but three old women, a sick goat, and two chickens, and Greece itself is permanently bankrupt, which suggests that dishonesty may not be the best policy after all, unless you want to become the US chief executive, or a ruthless autocrat, or both.

        • 91B20 1stCav (AUS) says:

          @Unamused. Well stated, as usual. I had the uneasy feeling at the time of Nixon’s resignation that his true crime in the court of public opinion was not the subversion of his oath of office and the Constitution, but rather that he was careless enough to get caught…a better day to us all.

        • Bill Williams says:

          Thanks, Unamused. If truth is more horrible than fiction, I appreciate your sparing me!

        • sierra7 says:

          Depends how you define (personal) success? Not everyone chooses to participate in the narcissistic, financial/political criminal enterprise system embraced by too many Americans. In our system most of the referees have been booted off the fields….capitalism is a game; nothing more. And, without those rules and referees we have the muck we are living within.

  30. raxadian says:

    I honesty find hard to understand why companies like Tesla and Netflix don’t go down the drain.

    Why there is stuff like Bitcoins farms?

    Don’t buy the hype, Millennials are in their forties, this in the whatever kids born in 2000s or more is called generation.

    Theirs is the smart phone, while my old cell phone barely had the videogame snake and texts.

    Theirs is the “apps” full of spyware to the wazoo, back in my time we called the things programs or games.

    Millennials are having their mid life crisis, they may know how to use a computer but they have to ask their kids how the hell their smart phone works.

    Go and bug those younger snappers in their teens, we Millennials are four decades old, is just too late.

  31. Citizen AllenM says:

    LoL, like pets.con, there’s a day when it’s over.

    Few will skate with greater wealth, and the rest with experience instead of wealth.

    Nothing new here, just another sillycon valley bubble…

  32. Dan says:

    WeWork: Revenue of $1.8b, loss of $1.9b, valuation of $42b

    IWG (pretty much identical business model): Revenue of £2.5b, profit of £105m, market cap £2.2b.

    Someone is selling snake oil…

    • Jessy S says:

      And it is We Work selling office space to companies that don’t need it. On that note, you have to ask yourself, who is in more trouble, We Work or their clients? Whatever the case, people are just throwing money away like it grows on trees. It is going to be great to see those companies fail simply because I don’t have any money invested in those tech stocks.

  33. Shawn says:

    Bay Area IPOs = early investors scam all their money back at the expense of my worthless 401k

  34. Just Some Random Guy says:

    WeWork is where hipster milenials go to “create”.
    In other words a business model that is sure to fail.

  35. andy says:

    Well if you look at marijuana companies valued in $Billions and trading at 100xsales, WeWork will look like Berkshire Hathaway. Things are officially off reservation now.

  36. Tim says:

    The market is full of stocks that are cash-burners and/or absurdly over-priced “growth” stocks. What is baffling is how they manage to raise capital, whether equity (IPO etc), bond issuance or loans. Looking at this, one can indeed conclude that the system is nuts.

    But the story of investors (etc) as gullible idiots is harder to buy into if you’ve worked there, as I have. Neither Wall Street nor the City, in my experience, are populated by total half-wits.

    So, there are stocks that you, I and everyone here knows are turkeys. But the capital still turns up. Why? Is it a case of investors putting in money that isn’t their own? Is there some dynamic here that ‘ordinary’, ‘common sense’ folks don’t know about?

    • 91B20 1stCav (AUS) says:

      Tim-I often joke that I don’t play the lotteries because, given the chances of winning vs. being hit by lightning, I’m only increasing my chances of being hit by lightning if I do play. Given the massive amounts of$ thrown at gambling by the general public (magic-lovers all, it seems), is it any surprise that so many rush to put big money in the biggest casino of all? A better day to us here…

      • Tim says:


        Looking at this, I think there’s an ‘Amazon syndrome’ here:

        “For years, Amazon and its investors lost money, but then it came good – the same ‘rags to riches’ story can happen to…………”

        Fundamentally, though, Amazon had a good and pretty conservative business model. All it needed was patience. That can’t be said for the current generation of cash-burners.

        But why let facts get in the way of a good story?

  37. Debt Wazoo says:

    “It will burn billions and billions”…

    “The hapless bondholders”…

    “a glorious year in the annals of gigantic cash-burn machines”

    I nominate this article for “Best of Wolf Street”. So much zing.

  38. Great, really all they want to do is sell the thing to the public at a huge valuation and wash their hands off it.

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