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WeWork’s European business tripled its losses in 2017

Company’s rapid growth means tremendous costs

(Credit: WeWork)

Amidst exponential growth, WeWork’s European business tripled its losses in 2017 from the previous fiscal year. The company has 48 locations across Europe, plus a pipeline of 30 new sites, according to a report in the FT.

The positive numbers… The co-working giant now boasts 23,000 members in the UK and doubled its revenue there to around $155 million. Additionally, its largest European location (Moor Place in London) recorded $2.1 million in pre-tax profit last year.

Economic Moat: The notion that its competitors will be able to expand internationally with the same scale is simply implausible. Even if Industrious, Knotel, and Convene were to join forces, they wouldn’t catch up. Expansion carries tremendous costs, and WeWork’s fundraising prowess allows for its aggressive strategy.

Sound Skeptical: WeWork competitor IWG (Regus) was the office darling of the dot-com era. When the downturn came, tenants dried up and the company had no way to pay for its ‘debt-like’ leases. It filed for Chapter 11 bankruptcy protection in the U.S. and retained its U.K. stock-market listing. IWG recovered and currently has a market cap of $2.01 billion. Although WeWork generated 70 percent less revenue than its competitor in 2017, it was valued at $20 billion in its last funding round.

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