WeWork could be profitable within the next two years as the co-working company focuses on righting its balance sheet, according to Piper Sandler. Analyst Alexander Goldfarb initiated coverage of WeWork with an overweight rating, saying in a Monday note to clients that the firm's focus on its balance sheet, as well as the growing popularity of flexible work, could help the company soon reach profitability. "While WE's storied past is well known, less appreciated is that WE is on the path to achieve profitability by late 2023/early 2024, which could accelerate given its flexible work station business model fits in the post-COVID world," Goldfarb wrote. Piper Sandler initiated WeWork with a price target of $10 per share, implying nearly 69% upside from Monday's closing price. Goldfarb said he believes WeWork Chairman and CEO Sandeep Mathrani's focus on the balance sheet could help the company go cash flow positive by the second quarter of 2024. WeWork has trimmed $1.5 billion in costs since Mathrani joined in 2020, according to the note. The growing popularity of flexible work will also give WeWork a boost, Piper said. The firm found that desk utilization rates at WeWork have reached 63%, compared to 45% during the lows of the pandemic. Meanwhile, overall desk utilization in traditional offices are stuck at about 35%, the note said. "There are no balance sheet items before 2025, which means all of WE's focus is purely on growing revenue and further trimming costs," Goldfarb wrote. "We think Sandeep can deliver." Shares of WeWork — which went public through a special purpose acquisition company (SPAC) merger in October — are down more than 31% year to date. The company's public market debut came about two years after it halted plans for an initial public offering, as investors raised concern over WeWork's business model. —CNBC's Michael Bloom contributed to this report.
The New York Stock Exchange welcomes WeWork, Inc. (NYSE: WE), today, Thursday, October 21, 2021, in celebration of its listing. To honor the occasion, Sandeep Mathrani, CEO, and Marcelo Claure, Chairman, joined by NYSE President Stacey Cunningham, ring The Opening Bell®.