WeWork Overpriced Despite Improvements
WeWork: Behind Their Overpriced $9B SPAC
The key point is that WeWork was being priced more like a cleaned up growth platform than a still levered lease book. The turnaround was real, with more enterprise customers, fewer bad sites, lower overhead, and stronger demand from hybrid work. But the value of those gains was heavily constrained by long dated lease obligations, weak liquidity, and a model where a small miss in occupancy could erase billions of equity value.
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The business had improved materially. Enterprise customers rose to about 60% of revenue, many locations were maturing, 66 weak sites were exited, and cost cuts reduced overhead. That made the core unit economics more believable, but it did not remove the balance sheet burden.
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The valuation gap came from capital structure. The base DCF pointed to roughly $3.5B of equity value, far below the SPAC's $9B enterprise value, and the model explicitly capitalized operating leases as debt like obligations. In practice, that means equity only works if occupancy and financing conditions stay favorable.
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The tailwinds were real but also available to competitors. Hybrid work increased demand for shorter office commitments, while IWG, landlords, and newer managed office providers were all chasing the same shift. That limited how much of the category upside WeWork could keep for itself.
Going forward, the winners in flexible office were likely to be the companies that turned workspace demand into fee revenue without carrying decades of lease risk. For WeWork, that meant the path to durable value ran through management services, franchise like expansion, and denser enterprise relationships, not through simply waiting for office demand to recover.