WeWork’s IPO, expected to deliver $50-$60 billion as a pricing, has run into turbulence. The market for flexible office space is big, but a global slowdown, a levered business model & the management missteps lead me to an equity value of $14 billion. https://t.co/Z3PAB217Ig pic.twitter.com/zwyQAA4OXS— Aswath Damodaran (@AswathDamodaran) September 9, 2019
I love how academics like yourself use a DCF valuation to come up with an equity value of a business that has no proven ability to generate cash flow.— BuysideHustle (@BuysideHustle) September 9, 2019
Your valuation relies entirely on a terminal value 10 years down the road, which is based on numerous arbitrary assumptions.
If they continue to grow 100%, they could have the terminal size already already in ~3, not 10ys. Terminal value implies FCF multiple of just 18, which would only make sense if they no longer grow by then. Seems overall rather conservative.— Value Investigator (@ojaz12) September 9, 2019
Couple of things worth digging into.— Foolish Trader (@foolishtrader) September 10, 2019
1. They will have to raise ~35b capital to stay alive over the next 7 years. Tough ask given current liquidity environment will make it harder for them. 1/2