In the ongoing saga of WeWork, Daniel Loeb and his hedge fund, Third Point, have downplayed their involvement in helping Adam Neumann, the former CEO of WeWork, buy back the company. Recent reports have suggested that Neumann and his real-estate company Flow are considering an offer to purchase WeWork with the assistance of Third Point.
However, Third Point clarified in a statement that they have only had preliminary conversations with Flow and Neumann regarding their ideas for WeWork. The hedge fund has not made a commitment to participate in any transaction at this time.
Neumann, who was ousted as WeWork CEO in October 2019, may benefit from the involvement of Third Point due to their profile and reputation. Cole Smead, CEO of Smead Capital Management, praised Dan Loeb and his charitable works, highlighting his positive opinion of him.
Third Point currently manages approximately $10.5 billion in assets as of November 2023.
Following Neumann’s departure from WeWork, the company faced significant financial challenges. Neumann had burdened the company with debt while overseeing its rapid cash-burning rise. This involved taking on long-term lease obligations that reached nearly $50 billion in 2019. Ultimately, WeWork’s attempt to go public at a valuation of $49 billion failed, leading to Neumann’s ousting.
Under new management, WeWork eventually went public two years later with a valuation of $9 billion. However, the company continued to struggle financially and eventually filed for bankruptcy in November 2023. SoftBank Group Corp., WeWork’s majority investor, also experienced significant losses due to the bankruptcy.
The rise and fall of WeWork has been captured in the “WeCrashed” miniseries.
Adam Neumann has acknowledged the company’s failure to seize opportunities and has expressed disappointment over the bankruptcy.
WeWork Founder Faces Challenges as Company Seeks New Opportunities
Former WeWork CEO, Adam Neumann, has recently made headlines with the founding of his real-estate company, Flow. Neumann’s success with WeWork has been widely recognized, as he reportedly earned at least $1 billion from the office-sharing company. However, the company has accused him of failing to cooperate with an independent investigation into its transactions and settlement agreement when he left.
WeWork has confirmed that it receives interest from external parties on a regular basis, although it did not specifically mention Neumann in its statement. The company emphasized that it carefully reviews these expressions of interest, always with the best interests of the company in mind.
In order to ensure its long-term sustainability, WeWork is committed to addressing its unsustainable rent expenses and implementing a comprehensive business restructuring plan. The company firmly believes that these measures will enable it to remain an independent, financially strong, and valuable entity in the future.
One potential party that has been connected to WeWork is Third Point, mentioned in relation to a possible deal. Cole Smead, from Smead Capital Management, commented on Third Point’s involvement, highlighting that they are typically known as a value investor but have also ventured into growth investments. Smead suggests that this aligns with the kind of deal that WeWork may be seeking.
Smead also expressed concern about Neumann’s ability to turn the company around, emphasizing the need for him to prove himself as a capable leader. Can Neumann deliver the results needed to drive higher returns on the business? This question remains unanswered.
As WeWork navigates through bankruptcy, it faces significant challenges in overcoming its previous financial setbacks. The cost of capital exceeded the returns, leading to the current situation. Neumann has not yet provided a comment on this matter.