Barry Sternlicht wouldn’t invest in WeWork

"There is no elevator down. You hit the floor," Starwood Capital founder says

New York /
Sep.September 16, 2016 08:30 AM

Barry Sternlicht doesn’t understand why people invest in WeWork at its current, $16 billion valuation. “Why would you go to to WeWorks (sic) at 300 times EBITDA.  If you got shares that are at zero value, like realty cash and incredible compensation,” he said Tuesday, according to a transcript. “When these things go down they do not go from 16 to 14, they go from 16 to 2. There is no elevator down, you hit the floor.”

WeWork TRData LogoTINY, the New York-based co-working company, reached a $16 billion valuation with its latest funding round in March and has raised around $1.4 billion from investors to date. Real estate bigwigs Mort Zuckerman and Bill Rudin are among the firm’s backers. But although the company is profitable, it is making less money than initially hoped.

According to leaked documents, the company in April lowered its 2016 profit projection to $14 million from $65 million, and its revenue projection by 14 percent to $532 million from $620 million.

The documents intensified the debate over WeWork’s valuation, and Sternlicht, who heads fund manager Starwood Capital, appears to be firmly on the side of the skeptics.

Speaking at the Delivering Alpha conference in New York, Sternlicht also said he would short Elon Musk’s electric car company Tesla and threw shade on Silicon Valley’s investment culture. “We want to know how does the company eventually make money and where’s the business model and that is still something you don’t talk about in Silicon Valley that much,” he said. “Pinterest $12 billion, I use it but I don’t pay anyone anything for it so it seems like a lot of money for a bulletin board, but that was the market cap of Starwood Hotels when we owned $1.6 billion we made $1.6 billion and we were told buy no market cap that year so it was like ‘wow, that’s a lot of…believing.” [CNBC] — Konrad Putzier


Related Articles

arrow_forward_ios
Wendy Silverstein (Credit: Getty Images)
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
Wendy Silverstein, co-head of WeWork’s real-estate fund, is out
WeWork CEO Adam Neumann (Credit: Getty Images and iStock)
WeWork’s side businesses are fizzling
WeWork’s side businesses are fizzling
Sarah Pontius (Credit: Union College)
Another head rolls at WeWork
Another head rolls at WeWork
Sandeep Mathrani (left) is WeWork's current CEO after replacing Adam Neumann (right) in 2019 (Getty, WeWork)
WeWork stock up on first day, but profitability still fuzzy
WeWork stock up on first day, but profitability still fuzzy
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Starwood raises $10B for distressed real estate plays
Sam Zell (left) and Barry Sternlicht (Photos by Studio Scrivo and Emily Assiran)
Battle of Monmouth: Zell and Sternlicht’s $2B struggle over warehouse REIT
Battle of Monmouth: Zell and Sternlicht’s $2B struggle over warehouse REIT
Two years after its IPO fail, WeWork will go public
Two years after its IPO fail, WeWork will go public
Two years after its IPO fail, WeWork will go public
Sam Zell of Equity Commonwealth and Michael Landy of Monmouth Real Estate Investment (Getty, ACRE)
No deal! Monmouth shareholders reject Equity Commonwealth
No deal! Monmouth shareholders reject Equity Commonwealth
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...