The rise and fall of WeWork is a sad situation that cost institutional and retail investors billions of dollars in losses. Once valued at $47 billion, WeWork trades at a $158 million market cap and performed a 1 to 40 reverse stock split to fool retail investors into buying more shares in the company.
You don’t make money buying crappy stocks and hoping for some magical turnaround because in most cases management dumped their shares while leaving retail investors like us holding the bag.
Now I know what you are thinking: Be greedy when others are fearful because WeWork is going to turn things around!
The truth is that remote work is the future of business so why invest in an archaic business model that doesn’t turn a profit?
7 Reasons to Avoid Buying WeWork Stock
1. WeWork Stock is Down 99% Since IPO
Believe it or not, WE stock is down 99% from its IPO. Buy and hold investors lost everything if they didn’t dump their shares.
WE stock is currently 7 cents if you take into account its presplit price. The current price is an illusion to fool you (more on that later).
2. WeWork’s Founder Sold His Stake After Causing WeWork’s Valuation to Tank Over $35 billion
Wework founder Adam Neumann received a $445 million payout to leave the company after destroying its Pre-IPO value by a staggering $35 billion!
Founder led companies outperform all other stocks by a wide margin so it’s a major red flag when the founder accepts a payout and exits the company.
A few examples of founder led companies are Tesla (Elon Musk), Nvidia (Jensen Huang), and Coinbase (Brian Armstrong).
3. WeWork’s Pricing is Too Expensive
I thought about getting WeWork office space because working from home can be tough when you have young children living at home.
That’s until I checked the rental rates for WeWork office space in my hometown of Washington, DC.
Holy smokes! WeWork charges outrageous rates for the inconvenience of working around strangers all day long.
$1,105+ per month for a private office!
$510 per month for the privilege of sharing an office with a complete stranger. Oh boy!
$29 a day to use a desk in a public space?
This is for Rhode Island Avenue in Washington, DC that isn’t the safest place to work. I’m sure rates are much higher in freelancer hotspots such as Los Angeles, New York City, Miami, Seattle, etc.
I don’t know why any digital nomad or freelancer would pay these rates just to use their facilities. You can rent an entire 3-bedroom condo or townhouse in places like Thailand for the same amount of money!
If WeWork wants to avoid bankruptcy then the company needs to completely redo their pricing. It’s out of touch with reality plus you will never own your office space.
It makes more financial sense to own your home/condo and work from home.
4. WeWork is Drowning in Debt with No Solution to Pay It Off
Wework has $17+ bililon in debt with only $200 million in cash on its balance sheet. This is almost impossible to overcome without filing for chapter 11 bankruptcy.
5. Remote Workers are Happier Than Traditional Office Workers
Studies show remote workers are happier and healthier than employees who commute to the office. Remote work gives you more time with your family plus you save money on transportation.
Productivity is all that matters, and no one should be forced to work in the toxic modern day office environment if they don’t want to.
6. WeWork’s 1 to 40 Reverse Split Was an Attempt to Fool Retail Investors
Another shady move by Wework management was to perform a 1 to 40 reverse stock split to prevent NYSE delisting and fool retail investors into losing their money.
As I mentioned earlier, WE stock trades at 7 cents presplit. Very sad.
7. Remote Gig Stocks Are The Better Alternative
Remote work will win in the end once CEOs replace office workers with AI and robots thanks to guys like Elon Musk.
Avoid WeWork stock and buy Upwork (UPWK), Zoom (ZM), or Fiverr (FVRR) shares instead.
My Gameplan for WE Stock
Shorting WE shares or buying puts is the only move I would consider making. Better yet, I’m probably going to avoid WE stock altogether and watch the company file for bankruptcy next year.
Some of you may try to buy the dip and hope for a comeback when management drove the company into the ground 4 years ago.
You are better off saving your money and earning 4%+ yield from a HYSA or money market account than gambling on WeWork stock.