WeWork IPO, the straw that breaks the back of the stock market? Valuation dropped by up to 79%
"They Will Turn Up the Market": Jim Cramer, About the Truth of the Moment by WeWork IPO.
Much like the Fed, as some would say, Jim Cramer has a dual mandate: to entertain and pump up the markets. He is absolutely excellent as an entertainer. But this morning on CNBC's "Squawk Box," he blew through how worried he is about the stock market teeming at the top to such an extent that a simple, messy, hyped-up company going public will "screw up" the entire market.
He wants the WeWork agreement "to disappear," he said. “I don't want WeWork. I mean, I don't want WeWork at any cost. ”
Not many companies stormed a stock market listing with higher pre-listing losses than WeWork ̵[ads1]1; Uber may have been the only one.
But what kills the appetite for this deal is not just the mega losses at the moment, and more mega losses forever until the money runs out – here I show the income report: How can a $ 1.8 billion revenue loss company $ 1.9 billion ? WeWork shows how. And it's not just that the prices of Uber and Lyft shares have plunged 29% and 48% from their respective peaks since the IPO.
It is the whole approach of WeWork CEO Adam Neumann to completely control the company and tear down shareholders with self-handling in small and large ways.
Today, WeWork announced – under its new moniker The We Co. – plans in its amended IPO filing (S-1 / A) to list the shares on Nasdaq. In an IPO, new investors buy shares that the company and / or insiders sell, and through this tactic, insiders can unload some of their shares, and the company can raise lots of new money from new investors to burn – and burning is exactly what WeWork will do with it.
A month ago, I pooh-poohed WeWork's first IPO filing: In Hilarious IPO Filing, WeWork Dreams of $ 3 Billion in Revenue But Has Millions in Tapes. The red-ink massacre comes in the second half. But I won't do any pooh-poohing today, I'll let Cramer do it. He is much more colorful than I am.
But one thing I would like to point out: The collapsing "valuation" of the company as calculated on the future stock price. Almost every day there is a new number, and investors refuse to gag, and then there is a lower number the following day, and billions from the previous number are lower, and investors still refuse to gag. And then there is an even lower number, as if it were a race to hell, where this stock belongs.
As a private company, WeWork was "valued" at $ 47 billion. This means that the investors who put money into the company in the last round of fundraising did so by paying a price per share that valued the total company at $ 47 billion. All of this is a lot of hocus-pocus negotiated behind closed doors, whose purpose is to arouse a nourishing frenzy among the next group of investors, now including IPO investors.
This morning, the IPO valuation had fallen to "as low as" $ 10 billion, according to leaks reportedly fulfilled by CNBC, Reuters and elsewhere. From $ 47 billion to $ 10 billion would be a 79% decline. [19659003] Cramer is concerned that this flawed "down, down, down" deal, as he said, is taking down the market itself as I had been working on pumping and spraying for years, and that's what he said on CNBC: [19659013] "We don't want that deal. I wish they would just go away."
"I just want it to go away. I don't want WeWork. I mean, I don't want WeWork at any cost. It's for the world top. "
" It sounds like & # 39; what a screaming kid, & # 39; but there are certain deals coming and they can really really take the air out of any market. "
"They can just say, 'We're terrible and we're just waiting until we're good again.' Why do they just have to keep going down, down, down [with the IPO price]?
CNBC co-founder: "Because they need the money."
"I know, but we won't give them money. They are only going to screw up the market. "
And he admonished whoever was watching the show:" If you want to stop the WeWork deal, please! Let's stop WeWork. "
That's how worried Cramer is that this misguided WeWork IPO deal, on its own, may be the last straw that breaks the back of the market – that's how it is overloaded with hype and ridiculously priced stocks that the market already is.
A route in the hyper-inflated bond market can blow everything up at this point. .. WOLF STREET REPORT: Here's what I'm worried about, and it's not a recession
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