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10/09/2019 / By Lance D Johnson
Nine years ago, the founder of the WeWork Company promised to “elevate the world’s consciousness.”The delusional hype artist, Adam Neumann, has been abruptly terminated, as the company’s initial public offering continues to implode. The failure of this company is a microcosm of the disaster waiting to happen with Wall Street.
With a successful IPO, WeWork would have magically secured billions in new capital, while gaining access to billions more in credit lines. In other words, with enough hype and inflated promises, a stupid idea can become infinitely funded by imaginary money. Losing millions of dollars a day, WeWork continues to operate in the red, with no consequences for its rapidly failing business model. Companies like this operate outside of the laws of supply and demand, and are not accountable to realistic economic principles. WeWork can spend into oblivion while never turning a profit. The delusion is propped up by a bubble of never-ending debt and investment.
Now, after blasting through other’s people’s money and contributing to inflation of the public’s money, WeWork is looking at bankruptcy. Bloomberg warns that WeWork “may be shut out of the public stock and bond markets to raise new money.”
WeWork lost $690 million in its first six months of operation. To date, the hype-machine has burned through $3 billion, with tens of millions in cash being lost with each passing day. Projected to burn through another $2.5 billion by mid-2020, WeWork is the epitome of Wall Street lunacy.
This is the same company that was once valued at $47 billion. The valuation is a façade of wealth because the company never made a profit. As the company’s revenue increased, its losses grew with even greater intensity. The company is being run by people who do not know the fundamentals of budgeting and profit/loss. They only know how to convince others to hand them money. Their success is a fake bubble, ready to burst.
Neumann’s fake bubble is about to burst and that means thousands of jobs will be lost, as families fall victim to a con artist, who has been empowered by Wall Street lunacy. Neumann’s $60 million private jet, the Gulfstream G650, is currently up for sale to recoup some of the money that was wasted away. Meanwhile, the new CEOs are warning employees to “anticipate difficult decisions ahead” to protect WeWork’s “long-term interests and health.”
Even if WeWork were to convince Goldman Sachs and JPMorgan to guarantee a $3 billion loan, which they were currently working on; the deal won’t be had if the company can’t get a successful IPO. The two new CEOs, Gunningham and Minson may have no choice but to accept that the company is a façade. They may have to turn over the keys to their initial investor SoftBank — the Japanese company that invested $10 billion into their bubble.
Yet, the collapse of WeWork is so immense; it could even threaten the existence of its Japanese investor. This is why SoftBank is currently working to guarantee WeWork another $1.5 billion investment, in hopes, that this time, they can move the company out of the red. With no clear plan of profitability to go by, SoftBank doesn’t know when to stop adding fuel to the fire. Are they willing to burn their entire telecoms-to-technology firm down to the ground just to make sure that WeWork lives up to its hype? What a facade.
For more on the lunacy of Wall Street, visit Collapse.News.
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