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WeWork raises $702 million with first bond sale

Fascinating marketing terminology was used in the bond offering

WeWork co-founders Miguel McKelvey and Adam Neumann (Credit: FT)

WeWork raised $702 million in a bond offering, according to Bloomberg. The company was able to sell the seven-year unsecured bonds to a yield 7.875 percent. How they did it?

Change the rules of the game: WeWork used a heavily engineered measure for earnings, instead of Ebitda. WeWork’s creative ‘community adjusted financials’ gives the appearance of profitability.

Heard on the Street: CreditSights summed it up as “sketchy financials with no public history. The massive asset/liability mismatch, significant cash burn, cyclically untested real estate business model, and uncertain path to profitability is usually a recipe for disaster.”

But… Defenders of WeWork point out that with billions in cash, the company has the liberty to grow ambitiously and will ultimately be profitable. 

Savvy Marketing from the Bond Offering

  • WeWork doesn’t design offices – it “programs space”.
  • “Space as a service” is mentioned 253 times.
  • A recession would make WeWork cash positive because it force the company to reduce the costs associated with exponential global growth. Brilliant marketing — wishful thinking!
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