🏢 Are We not Working?

Bed Bath & Beyond struggles to keep its stores stocked.


Hey Global Investor! Here’s what you need to know before the US markets open.

Market Snapshot 📈

S&P 500 (Wednesday’s Close) 4,027.26 +23.68 (0.59%)

NASDAQ (Wednesday’s Close) 11,285.32 +110.91 (0.99%)

FTSE 100 (4:00 PM IST) 7,476.89 +10.29 (0.14%)

NIFTY 50 (Today’s Close) 18,515.15 +31.05 (0.17%)

USDINR (4:00 PM IST) 81.58(1 Year +10.49%)


🔥 Top Movers

PRCH +40.94%
ESMT +34.69%
XGN +33.33%

CCCC -16.20%
PAGS -14.57%
ENJYQ -13.33%


WeWork: Rough Waters

WeWork (WE) recently announced that it would close 40 underperforming offices in the US in an effort to cut costs. The company has failed to post a profit more than a year after it went public. However, International Workplace Group (IWG), WeWork’s competitor, posted strong growth in revenues of 25% year-on-year to £737m while considering factors like increased rates and higher occupancy mitigating ongoing inflationary pressures.

Increased Demand 

Worldwide inflationary constraints are pushing organisations to be “more agile” with their corporate real estate holdings. Companies are also focusing on building an engaging and collaborative culture, which has led to a favourable change in the perspective of co-working spaces.

Notable co-working providers have reported occupancy quarter-over-quarter this year, with some estimating occupancy upwards of 70% in primary markets. WeWork said its occupancy rose to 73% in the second quarter of 2022, which can be compared to the occupancy recorded pre-pandemic in the fourth quarter of 2019.

Meanwhile, Switzerland-based IWG announced a first-quarter sales growth of 17.7%, or $782 million, which it credited to the surge in demand for suburban co-working spaces. IWG currently operates in 300 US cities under two brands, Regus and Spaces. The co-working giant revealed plans to launch 500–700 additional US co-working locations in smaller markets under various brands in June.

WeWork claims that its global business consists of large Fortune 500 and 100 companies. Despite WeWork’s revenues increasing 7% during Q2 2022 and 37% year on year, the company made a net loss of $635 million in the second quarter. The company’s cash reserves, which were $924 million at the end of 2021, are now $460 million.

Key Highlights From Q3:

  • Revenue: US$817.0m (up 24% from 3Q 2021).
  • Net loss: US$568.0m (loss narrowed by 29% from 3Q 2021).
  • US$0.74 loss per share (improved from US$4.54 loss in 3Q 2021).

Downsizing

The company appointed Sandeep Mathrani as CEO after cutting ties with Neumann. Mathrani has closed locations, renegotiated leases, and slashed thousands of jobs after taking charge as part of an intense cost-restructuring exercise.

The company’s need to close 40 locations in the US results in almost 5% of WeWork’s total desk space and hit revenues. WeWork has said that shutting down offices will play a major role in cutting costs. Mathrani went on to promise to turn the company profit and reduce unnecessary spending.

Before a first unsuccessful attempt to go public, WeWork was given a private market valuation of $47 billion in 2019, at the height of that growth spurt. The company’s market value is currently slightly shy of $1.8 billion.

WeWork posted a loss of $568 million, or 75 cents a share, for the three months, narrower than the loss of $802 million, or $5.50 a share, in the same period a year ago. Analysts were expecting a more limited loss of 48 cents a share. WeWork expects its fourth-quarter revenue to be between $870 million and $890 million, below Wall Street targets of $923.8 million.

Analysts are recommending a strong “Buy” call for the company’s stock. WeWork’s stock is expected to climb by 203.58% over the next 12 months, according to the $8.47 average 12-month stock price estimate. The lowest and highest targets are $6.57 and $11.55, respectively. The question is will the company be able to tread through these rough waters?

Market Reaction
WE ended at $2.79, up 4.49%.

Company Snapshot 📈

WE $2.79, +0.12 (+4.49%).

Analyst Ratings (6 Analysts) BUY 83% HOLD 17%  SELL 00%


Newsworthy 📰

  • Recalled: Tesla to Recall About 80,000 Cars in China (TSLA +7.82%)
  • Trouble in paradise: Bed Bath & Beyond Struggles to Keep Stores Stocked for Black Friday, Holiday Season (BBBY +4.88%)

Later Today 🕒

  • Iris Acquisition Corp. Earnings (IRAA)
  • Hyzon Motors Inc. Earnings (HYZN)
  • The Intergroup Corporation Earnings (INTG )
  • Houston American Energy Corporation Earnings (HUSA)

Today’s Fun Fact

1 in 10 Americans sells their home due to paranormal activity.


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