Click here for the PDF: The Weekly Beacon – November 10 2023
We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: WeWork, Adam Neumann, Chapter 11 filings, Bankruptcy, Office space company, Index seasonality, NFT bubble, NFT trade volume, Board Ape NFT, LG, AI, TV company, AI ETF, SoftBank, Credit card delinquencies, Credit usage, Consumer budgets, Inflation vs. prices, Amazon healthcare, Debt servicing, Interest payments, U.S. federal debt.
WeWork officially files
WeWork officially filed for bankruptcy this week. This comes just a week after reports of bankruptcy filings being imminent. The Chapter 11 filing closes the story of WeWork which has been controversial, ridiculous, and outlandish. We have regularly talked about WeWork’s spiral throughout this publication’s history including last week when we looked at the rumors that signaled an imminent bankruptcy filing by the company.
WeWork was once a Silicon Valley and Wall Street darling that promised to upend the way people worked in offices. We are glad we did not buy the hype.
In WeWork’s bankruptcy filings, the company said it has come to a restructuring agreement with most of its stakeholders and will aim to drastically reduce debt while further evaluating its commercial office lease portfolio. This agreement is expected to erase about $3 billion US of WeWork’s debt, CEO David Tolley told The Associated Press.
The company was once valued at $47 billion by some investment banks and venture capital group is now essentially worthless to its shareholders. Shares have plummeted by 99% this year. The company reported total debts of $18.65 billion and total assets of $15.06 billion in its initial bankruptcy filings.
Former co-founder and CEO Adam Neumann said that the filing was “disappointing.” Neumann received a golden parachute when large shareholders pushed him out of WeWork due to his poor management, and ridiculous spending habits with company funds (Neumann once attempted to trademark the term We). Neumann received close to $2 billion in cash and stock compensation at his departure from WeWork. Neumann has an estimated net worth of $2.2 billion as of this year. The company eroded shareholder value and erased billions of investor capital, but Neumann became a billionaire, which makes sense. WeWork’s list of issues and causes of bankruptcy are quite long but Covid-19 and the recent rise in global interest rates more than likely accelerated the downfall.
