WeWork Inc

Company Overview: WeWork Inc. (NYSE: WE) is a global flexible workspace provider. The Company is engaged in delivering technology-driven turnkey solutions, flexible spaces, and community experiences. Its product offerings include Core space-as-a-service, WeWork All Access, WeWork On Demand, and WeWork Workplace. Its core business offering provides flexibility across space, time and cost. Its memberships include access to space, in addition to access to certain amenities and services, such as private phone booths, Internet and others.

As per our previous US Daily report published on ‘WE’ on 27^th September 2023, Kalkine provided a ‘Speculative Buy’ stance on the stock at USD 3.05 based on “price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis” and the stock price has now corrected by ~58.69% since then.

Based on the below mentioned updates and events, a Sell rating is assigned to WeWork Inc:

• WeWork, the troubled office-sharing company, witnessed a substantial drop in its stock value on November 01, 2023, with reports suggesting that it might file for bankruptcy in the coming week.
• The company's shares plunged by more than 50% during early trading in New York, starkly contrasting its previous vision as a promising force in the future of office spaces.
• A series of challenges have beset WeWork, including a failed attempt to go public in 2019 and the departure of its co-founder.
• The COVID-19 pandemic further exacerbated its problems as remote work became more prevalent.
• There are reports indicating that WeWork is considering bankruptcy in New Jersey, although the company has refrained from commenting on the matter.
• Previously, WeWork informed U.S. regulators of an agreement with creditors to temporarily defer debt payments.
• WeWork's difficulties stemmed from factors such as over-expansion, excessive borrowing, and rapid site acquisition, without adequate controls in place.
• Rising interest rates also added to its borrowing costs.
• The company's woes began with the failed IPO in 2019, which ultimately led to the resignation of its founder, Adam Neumann.
• Despite various efforts to mitigate losses, WeWork's stock market valuation plummeted, leading to its listing on the New York Stock Exchange in 2021 with a significantly reduced valuation.
• SoftBank, a major investor, incurred substantial losses in its support of WeWork, which had reached a peak valuation of around USD47 billion in early 2019 but suffered an almost 98% drop in its stock market value in the following year.
• In August, WeWork raised concerns about its ability to sustain operations, citing softer demand and a challenging operating environment.
• Several top executives departed from the company during the same year, including CEO and chairman Sandeep Mathrani.

WE’s Daily Chart

Considering the recent bankruptcy news, current trading levels, risks associated, and volatile market conditions on the back of rising interest rates, a ‘Sell’ rating is assigned to the “WE” at the current market price of USD 1.26 (as of 02 November 2023, at 06:40 am PDT).  

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is November 02, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’

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