WeWork collapsed, lessons to be learnt from IPOs!

WeWork has filed for bankruptcy protection. Once backed by Softbank and other top VCs and valued at $49 billion, the company made its stock market debut via SPAC merger in October 2021, trading for $11 at a market cap of $9 billion. Today it’s 99% down.

The company has been burning cash since its statements are made public.

Revenue growth inconsistent, net income & EBITDA negative. Free cash flow and operating cashflow has been negative. No economic moat.

Not everything that IPOs is investable. In fact IPOs are used to transfer wealth from investors to the venture capitalists who have stakes in the IPO company.

If the investor had done some basic checks using Gurufocus, Seeking Alpha & Morningstar, he would have known that this wasn’t a good investment to begin with.

How to decide if the company is investable

The following are important characteristics of a company that is possibly investable.

•Increasing revenue growth for at least 5 years

•Operating income & net income positive and increasing for at least 5 years

•Operating cash flow and free cash flow positive and increasing for at least 5 years

•Wide economic moat, very important as this allows the company to defend against its competitors

•Good cash to debt ratio

•Undervalued! This step is the most important as most investors do not check its intrinsic value. Use sources like Morningstar or ownself calculate!

$NASDAQ(.IXIC)$

$WeWork Inc.(WEWOW)$

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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.

Comments

StreetCat
2023-11-02
StreetCat
They gambled that the fed would lower interest rates but the fed wins again.
CharlesKC
2023-11-04
CharlesKC
intrinsic value is very subjective and I think sometimes misleading
jamal1980
2023-11-05
jamal1980
bagaimana cara trading di sini

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Once backed by Softbank and other top VCs and valued at $49 billion, the company made its stock market debut via SPAC merger in October 2021, trading for $11 at a market cap of $9 billion. Today it’s 99% down.</p>\n<p>The company has been burning cash since its statements are made public. </p>\n<p>Revenue growth inconsistent, net income &amp; EBITDA negative. Free cash flow and operating cashflow has been negative. No economic moat. </p>\n<p>Not everything that IPOs is investable. In fact IPOs are used to transfer wealth from investors to the venture capitalists who have stakes in the IPO company. </p>\n<p>If the investor had done some basic checks using Gurufocus, Seeking Alpha &amp; Morningstar, he would have known that this wasn’t a good investment to begin with.</p>\n<p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/47339616df771c9f4425a38c46cecc90\" tg-width=\"1640\" tg-height=\"2234\"><span></span></p>\n<h3>How to decide if the company is investable</h3>\n<p>The following are important characteristics of a company that is possibly investable.</p>\n<p>•Increasing revenue growth for at least 5 years</p>\n<p>•Operating income &amp; net income positive and increasing for at least 5 years</p>\n<p>•Operating cash flow and free cash flow positive and increasing for at least 5 years</p>\n<p>•Wide economic moat, very important as this allows the company to defend against its competitors</p>\n<p>•Good cash to debt ratio</p>\n<p>•Undervalued! 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No economic moat. </p>\n<p>Not everything that IPOs is investable. In fact IPOs are used to transfer wealth from investors to the venture capitalists who have stakes in the IPO company. </p>\n<p>If the investor had done some basic checks using Gurufocus, Seeking Alpha &amp; Morningstar, he would have known that this wasn’t a good investment to begin with.</p>\n<p class=\"t-img-caption\"><img src=\"https://community-static.tradeup.com/news/47339616df771c9f4425a38c46cecc90\" tg-width=\"1640\" tg-height=\"2234\"><span></span></p>\n<h3>How to decide if the company is investable</h3>\n<p>The following are important characteristics of a company that is possibly investable.</p>\n<p>•Increasing revenue growth for at least 5 years</p>\n<p>•Operating income &amp; net income positive and increasing for at least 5 years</p>\n<p>•Operating cash flow and free cash flow positive and increasing for at least 5 years</p>\n<p>•Wide economic moat, very important as this allows the company to defend against its competitors</p>\n<p>•Good cash to debt ratio</p>\n<p>•Undervalued! 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In fact IPOs are used to transfer wealth from investors to the venture capitalists who have stakes in the IPO company. If the investor had done some basic checks using Gurufocus, Seeking Alpha & Morningstar, he would have known that this wasn’t a good investment to begin with. How to decide if the company is investable The following are important characteristics of a company that is possibly investable. •Increasing revenue growth for at least 5 years •Operating income & net income positive and increasing for at least 5 years •Operating cash flow and free cash flow positive and increasing for at least 5 years •Wide economic moat, very important as this allows the company to defend against its competitors •Good cash to debt ratio •Undervalued! This step is the most important as most investors do not check its intrinsic value. 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