Things are only going to get worse for WeWork, predicts NYU professor profgalloway: ‘It’s beginning to smell like malfeasance'
The following is his recent blog post in full, republished by permission. It originally ran on his own blog,"In it, he says that he can't wrap his head around what's occurred at We. He says something is"very, very wrong" and predicts that malfeasance at We will be discovered soon.
He says that the rise of"idolatry of innovators," coupled with the halving of journalists, has allowed for a culture that rewards and enables incremental tasks in companies like We.So, the mother of all party crashers took a dump in the We IPO punch bowl. The crasher? Math. The autopsy will show the shelving of this IPO was death by S-1.
This was a case of immunities kicking in after the requisite SEC disclosure. As the greater fool theory has hit a wall, We will now need additional capital from the private markets, who are no longer under the influence. The firm will be forced to sell equity/issue debt at a priceWe has gone from unicorn to distressed asset in 30 days.
What got We here, isn't going to get it where it needs to go. Each layer that comes off the We onion stinks more and more. The media has turned its attention to the Neumanns, and it's as if the lights have been turned on at a cocaine-fueled party that ended several hours too late. Everyone and everything suddenly looks bad — scary, even.The new CEO should be from a REIT, ideally a hospitality or commercial real estate REIT.
The directors enabled an information pyramid scheme and indulged Adam, in exchange for hoping they could create enough valuation momentum, via nine rounds, to carry their shares to an exit in the public markets.in share purchases at the offering price. If that's the case, shouldn't they want to invest billions more at the now low-low 80%-off price? Or were they simply looking to pump and dump?, the lines between vision, bullsh*t, and fraud are pretty narrow.
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