Economically Unattractive (EP.102)

WeWork's Valuation

WeWork's valuation has seen a dramatic shift, raising questions about the stability of private market valuations. Ben Carlson highlights the company's fall from a $47 billion valuation to being worth $20 billion less, suggesting that WeWork's initial valuation might have been inflated 1. This situation underscores the potential risks for employees whose equity options have lost value, impacting their motivation to stay with the company. Michael Batnick notes, "The bubble is popping in rich people's pockets," indicating that the repercussions are largely contained within the private sector.

If WeWork is worth 47 billion, then animal spirits is worth 350 million.

--- Michael Batnick

This scenario reflects a broader trend where private companies are preemptively adjusting valuations to avoid negative public market reactions.

   

Uber's Market Impact

Uber's financial trajectory mirrors broader challenges in the private market economy. Michael Batnick and Ben Carlson discuss Uber's decline, noting that its losses are the only aspect scaling 2. Despite high private valuations, Uber's stock has stagnated, reflecting the volatility and unpredictability of tech investments. The conversation also touches on the cultural issues within Uber, with Ben remarking on the problematic behavior of its leadership.

The only component of the business that's scaling is the ride hailing firm's losses.

--- Michael Batnick

This narrative highlights the need for more sustainable business models in the tech industry, as well as the potential pitfalls of overvaluation.