It's a 1920s (pre-FDIC) bank, or a 2008-style risky financial instrument, like an Auction-Rate Preferred.
WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread.
This works as long as there are lots of customers who will pay a premium for short term flexibility. We can presume that will be somewhat cyclical, although in fairness they also probably have caught a secular trend toward remote / coworking / flexibility.
When the cycle turns down, those short termers are done but the long term promises to suppliers keep going ...
That also leaves aside the question of leases with escalators. I have heard a rumor that some WeWork locations have substantial out-year escalator clauses (meaning the rates they owe to suppliers sharply increase in future), meaning that even if customers stay on board, WeWork will face a need to raise prices substantially to meet its obligations.
WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread.
This works as long as there are lots of customers who will pay a premium for short term flexibility. We can presume that will be somewhat cyclical, although in fairness they also probably have caught a secular trend toward remote / coworking / flexibility.
When the cycle turns down, those short termers are done but the long term promises to suppliers keep going ...
That also leaves aside the question of leases with escalators. I have heard a rumor that some WeWork locations have substantial out-year escalator clauses (meaning the rates they owe to suppliers sharply increase in future), meaning that even if customers stay on board, WeWork will face a need to raise prices substantially to meet its obligations.