The WeWork IPO: The Day The ‘Music’ Died

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,”

Citigroup™ CEO Chuck Prince in a July, 2007 interview with the Financial Times™.

There are a lot of quotes pertaining to the hubris of those deemed to be “in the know” that brushed aside any calls of caution from those they saw as: below their pay-scale. The above is just one, but it may be the most poignant, because not long after – it all fell apart.

All of it.

Of course there are those some may consider just as memorable. But the originator, along with the entirety of the network that still portrays him as someone people should listen to, continues desperately hoping viewers will forget his most infamous call on Bear Sterns™.

My guess is that Mr. Prince possibly danced for joy after hearing it thinking he was outdone. But I digress.

Another famous quote that seemed to encapsulate the absurdity of hubris when it came to what constituted a true business, where absurdities like net profits were an integral concern, was the term “It’s different this time,” along with its differentiator known as “disruptive tech.”

This is (my conjecture) the sales pitch vernacular created to quell instinctive fears such as when you’d hear the words “Dot Com,” “Guaranteed Returns,” “Ponzi,” or “Madoff.” And for a time, almost 10 years to the date, it all worked brilliantly. It appeared the party would never end.

Then, someone walked in and barfed on the shoes of the “Market” host. But they weren’t finished, by a long shot…

Then they staggered across the carpet depositing sidewalk remnants of “San Fran” clinging to their own, mounted the stage at the D.J. station, raised their bottle of _______(fill in the blank) and passed out mid cheer, collapsing on the turntables causing a firestorm of electric lightning from fuses blowing everywhere, ruining the party for those still waiting to cash out. Not to mention their hanger-on entourage of business vapid plebes that surround them.

That someone – was of course: the WeWork™ IPO.

The thing that’s truly different this time, is rather than calling in the EMT’s (also known as “new money”) – they’re letting this once “king” of the unicorn stable perish right there in the pool of swill and toxic mess he created known as its S-1 filing.

Not only does no one appear ready to help try and resuscitate this beast with a bit of mouth-to-mouth aka “emergency liquidity.” But everyone seems to be all of the same mind, rather than call an ambulance, they’d rather call a SERVPRO® van. Because, after all, they’re probably the only entity with a tag line that truly matters and is needed now, more than ever. e.g., “Like it never even happened.”

The problem is it has, and in front of $Billions, many of which now appear to be not just circling the drain – but already down it. And no amount of emergency measures may change what already is. Although that may not stop those with no other option than to try to do just that, regardless of how utterly ludicrous the proposals may be. (i.e., Son to buy even more as his own Vision Fund appears to be floundering.)

The issue here is this debacle is not a symptom – it’s the culmination, or what may be compared to the metastasizing of the cancer that has infected the capital markets this last decade. i.e., That a viable and valuable business no longer relied on net profits and growth to matter. What now constituted a valuable and viable business was only narrative growth and/or spin to propel the “greater fool theory” to never before seen in human history heights.

Again, this it did, brilliantly. That is, until… (see above for clues)

The issue currently that entails the entirety of both “disruptive tech” along with the once vaunted V.C. enclave specializing in just that, is this latest debacle represents a clear, understandable poster-child for those whose 401K’s and more have been the prime targets of these utter disasters.

And the fury and backlash, I believe, is only just beginning in earnest.

If you think this is hyperbole, let me illustrate what many (again, my conjecture) are currently pondering as they look at their most recent “returns” on those prior “growth” stocks many were advised “You gotta get in on this!” as they seem not only can’t remain at their IPO offer level, but sink further and further into the oblivion. Hint: Uber™, Slack™, Spotify™, etc., etc., etc.

WeWork is now being reported to be only months away from possible (wait for it…) bankruptcy.

WeWork – just six weeks ago – was also being told/sold (aka “reported”) to the investment community at large (which probably included your retirement fund) to be worth nearly 50 $Billion.

I may not be that great at calculus. But what I am pretty sure of, is that I can calculate anyone reading the above two lines required no calculator to quickly noodle, then rendered the precise sum known as, “A F’n fraud!!”

Then again, maybe it is just me. But from the lack of further “investment” queries, along with the sudden rash of “late to the after-party” press coverage. I don’t think so.

The other issue facing not just the IPO world, but the “markets” in general is the one that enabled this entire “magic show” to happen in the first place, supplying evermore smoke and even more creative flexible mirrors, has suddenly reached its own “curtain pulled” moment of reckoning with the suddenly, panicky Repo Market.

The problem here is, that when it comes to “music,” it appears that not only has it stopped, but most assuredly worse…

The banks seem to not even trust those they brought to the “dance” themselves, and are willing to leave them flat, looking for their own ride home. All while the entirety of the mainstream business/financial media seems to collectively parse “nothing to see here” as it whistles past the graveyard of “things that go bump in the repo-night.”

Let’s just hope the next tune we hear isn’t “Helter Skelter.” Or maybe that’s precicely what that humming is we’re already beginning to hear.

© 2019 Mark St.Cyr

Here’s Your Latest “Expert” Review Summary on Bitcoin

Regardless of what one thinks about cryptos or their biggest player known as Bitcoin™, one thing is for sure: The experts that call themselves such and will charge you handsomely for their “insight” seem to be not all that “expert” when you look at their recent track records.

I am on record, stated it as much and made it way, way, way back in the beginning of this year with my “on the record” call. As many readers and listeners of my show are well aware – I have not changed it one iota, regardless of what has been transpiring.

To also reiterate (for those that are new): I am also one of the only one’s to correctly call the initial fall and call the actual year end valuation (using close enough for horseshoes analogies) when all the so-called “experts” were not even close, but worse, were so incorrect that many seemed to vanish, only to reappear when they believed the worst was over. Hint: it wasn’t and may be not even close.

I have put up an updated “picture” as the say in “The Valley” and made a few notations that I feel show precisely who may have been the one that had an actual clue about what he was arguing, and those that had none. But that’s for you to decide, as it always is.

Here is the “family album” as it has progressed since my initial observation at the beginning (May) of this year. To wit:

(Chart Source)
(Chart Source)
(Chart Source)

So with that said, here’s that updated chart as of this writing. To wit:

(Chart Source)

Could this “market” suddenly reverse and go to the stratosphere? Of course, no one knows for sure. But if someone tells you that they do? Don’t just walk, but run. And fast!

And for those of you that didn’t follow such from any of the above? You have my condolences.

But then again…

What do I know.

© 2019 Mark St.Cyr

‘It’s Different This Time’ Unicorns Suddenly Become ‘Old Gray Mares’

“The old gray mare, she ain’t what she used to be,
Ain’t what she used to be, ain’t what she used to be,
The old gray mare, she ain’t what she used to be,
Many long years ago…”

From the children’s rhyme: The Old Gray Mare

Remember when the term “IPO” and “Unicorns” conjured up images of riches; for some not just riches, but mega-riches?

Oh, how the times have changed.

It is hard to fathom just how utterly ridiculous the narrative for investment riches, business ethics and more have morphed from a once laudable pursuit to a complete and utter cesspool of lies, deceit, and in my opinion – outright criminal fraud. This is what the “disruptive world of tech” has brought us.

Painting with a broad brush? Of course I am, but that doesn’t mean I’m far from right. For if you want a little of the “finer points” as they say. I have two words for you: San Francisco. How are all those “riches” doing for you there? Hint: It’s going to get a whole lot worse for both if the current “IPO” revelations stick around half as long as the excrement on its sidewalks.

The very idea that a company, any company, was allowed to come to the public markets with: no net profits, no understandable metrics to ever achieve them, and last, but certainly not least, to openly state they may never become profitable –ever – was not only a ludicrous notion, but I’ll say it again, in my opinion – outright criminal.

The only aspect in all of this that makes these accusations themselves appear minor in comparison (which is no small feat by any measure) is that these entities were told/sold to be worth not just $Billions (unicorns), but for some 10’s of $Billions (deca-corns), and for the one that was suppose to be the “unicorn of unicorns” Uber™, a media fueled whisper of over 120 $Billion. I coined that to be a “farce-icon.”

Below is a “picture” as they call them in “The Valley” for a representative sample of just how all these “prancing ponies” of mythical stature have been doing as of late. You know, when these so-called “markets” have not only recovered any prior losses, but have now been “juiced” once again with rate cuts, an ending of balance sheet normalization, and more promises of “do what ever it takes” from central bankers across the globe.

By right, in the words of the late Rick Ocasek, it should be the optimal time to once again, “Let the good times roll,” yes? To wit:

(Chart Source)

Maybe a better quote would be from Bob Dylan, “For the times they are a-changin’.”

For those that think I’m just singling out just the obvious to make my point (which by definition should eliminate any surmises) here a few more of these once magical wealth enhancers, again, to wit:

(Chart Source)

The first is Spotify™, then “Slack™, followed by Snap™. The time frames represented are by weeks, except for the center and is via a daily. This was so I could fit them all together nicely showing their performance (or lack thereof) since their IPO debut.

What needs to be pointed out here (or reminded) is that the above downward progression in the above is happening precisely during the time that the Federal Reserve has not just signaled, but actually implemented, a complete reversal to once again provide the circumstances that was supposedly the ideal “wind beneath their hoofs” as to help propel these mythical business models to even higher heights. And the results? Just look to the above for clues.

Now some of you may be looking at that chart on the right of the above (e.g., Snap) and saying to yourself, “But, but, but…that’s going up?!” Yes it is, and it’s precisely why I included it to help further knock down any sort of accusations that I’m surmising.

Remember the Snap IPO media frenzy in 2018? You remember, don’t you? Remember all the mainstream business/financial media talking heads on TV showing you just how “Amazingly fantastic!” it was to be able to put cartoon donkey ears, rabbit eyes and more over your face, “And in real time!!”

This was the illusion (more like delusion) that helped build a narrative that this company was worth $billions, upon $billions, upon $billions. Hint: I think it lost that narrative – along with those $billions.

By the end of 2018 Snap had a stock value of under $5. It was on a fast progression (as in lost 2/3rd’s of its remaining value in mere months and was then less than $4 away) from needing to be reclassified to a “Penny Stock,” with the very real possibility of being a future candidate for de-listing.

So here’s the question: Did you hear any of this over those ensuing months? And for those of you that found this “investment” residing in your retirement account on the advice of “You need exposure to growth companies such as this to protect you from inflation for a true diversified investment strategy?” You have my condolences.

Here’s what you have heard of late (paraphrasing the same “press”) “Snap is on fire! Its stock has now doubled in value!!” Now, a few months later bringing us to today “Snap’s stock has nearly doubled again! It’s nearly quadrupled in value in 2019. This shows this stock is back!!”

Here’s what they’re not saying: It’s still only worth about 1/2 of what some that “bought in” to all that hype on its IPO debut. That’s why I wanted to make sure I included it in the above. For it’s a far cry from what you’re hearing or told/sold across much of the same media sources. Oh yeah, and their “glasses” are back also. You know, because they’re supposedly a “camera company.” So there’s that I guess, because it worked so well the first time around.

The only reason (my conjecture) they have bounced, is at that valuation (or should I say little?), it’s an obvious buy-out, or take-over play in some consolidation deal, or as the media likes to push “Merger Monday!” feature.

I believe many of the more prudent short sellers covered leaving it the ability to float back up via pure speculative positions on any possible buy-out. Any remaining shorts (i.e., those waiting for zero, or just speculators) are just enabling the algos to engage the hunt, seek and destroy program attacking any higher positioned resting orders.

But I think the days of dreaming of riches (let alone getting back to its debut highs) are about as probable as their newest foray to re-introduce their “glasses” has in succeeding. We shall see.

Speaking of we…

We can not finish today without bringing up what may go down in unicorn IPO history as the company that may single-handedly bring down the entire farce that is “It’s different this time” disruptive tech.

Ladies and gentlemen I bring you , WeWork™.

But I would like to leave you with not my words about the above, but rather, what appears to now be obvious to anyone with modicum of business acumen. Those words?

“Is WeWork a Fraud?”

Hint: read the aforementioned link article and decide for yourself. Then apply the same to all of them and rethink everything you’ve been told/sold all while remembering…

“You don’t need a weatherman to know which way the wind blows.”

What most needed was an honest broker to both steer them and keep their retirement accounts clear of these storm depressions of investment when they first appeared on the horizon.

But that’s just like asking for another mythical creature, is it not?

© 2019 Mark St.Cyr