Markets: WeWork was a dumb idea for a simple reason Dave Coker · Follow Published in DataDrivenInvestor · 4 min read · 1 day ago 1 day ago -- 3 ShareThe Asset / Liability mismatchBig news yesterday that was hardly a secret: WeWork filed for bankruptcy. But anyone even moderately familiar with WeWork’s business and basic principles of Financial Risk Management knew this was a bad idea for simple and well recognised reason: what is called the Asset / Liability mismatch. Banks deal with the Asset / Liability mismatch all the time, but the underlying asset class banks deal with — money — is clearly different from the asset class WeWork monetised — office space. At first glance,WEWORK’S BUSINESS MODEL WAS PRETTY SIMPLE— offer short term workspace of various capacities to individuals as well as businesses. In fact there were multiple warning signs that this company was a bad idea but, perplexingly, investors gave the company a second (and third, and fourth and, well you get the idea) chance.

Source: The Guardian November 09, 2023 10:14 UTC