Turn a Massive Loss into a 26,000% Profit

By Matthew Milner, on Wednesday, October 23, 2019

An investor in Asia just gained control of a massive American startup…

And it’s not happy about it.

You see, despite pumping more than $10 billion into this startup over the last few years, this investor just saw the startup’s value crash by 80%.

Meanwhile, a different group of investors in the same startup is grinning from ear to ear. That’s because they’re sitting on estimated gains of nearly 26,000%.

Today, I’ll explain what’s going on here…

And then I’ll show you how to always put yourself on the winning side of deals like this.

Introducing WeWork

The startup I’m referring to is WeWork.

WeWork is a real estate company.

Basically, it provides a low-cost and hassle-free way to rent office space.

Instead of forcing tenants to sign multi-year commitments, it offers month-to-month leases.

It also provides tenants with furniture and Internet access, along with nice perks like free espressos and cappuccinos, and cold beer on tap.

A $100 Billion Startup?

Launched in 2010, WeWork quickly established a solid business catering to freelancers, fast-growing startups, and big companies like IBM.

By 2014, it was valued at more than $1 billion.

As the company grew and raised more and more capital, its valuation skyrocketed:

Earlier this year, for example, a Japanese conglomerate called Softbank invested several billion dollars into it at a $47 billion valuation.

That’s a big number…

To put it in perspective, one of WeWork’s publicly-traded competitors, Boston Properties (NYSE: BXP), is worth just $20 billion — despite the fact that it generates far more revenues than WeWork, runs a profitable business, and pays a fat dividend.

But investors like Softbank were willing to bet that, one day, WeWork would be one of the biggest companies in the world… bigger than Boston Properties could ever imagine.

In fact, investment bankers were saying the company could soon be worth $100 billion or more.

But then, things quickly unraveled…

Trouble Behind the Scenes

WeWork announced plans to go public in an IPO in 2019.

And that’s when the world finally got a look at its financials.

As it turns out, its 2018 losses added up to $1.6 billion, up from $429 million in 2016. Furthermore, its IPO prospectus revealed a number of questionable business practices taken by the company and its founder.

As a result, its IPO stalled — and all of a sudden, WeWork found itself in a cash crunch…

It if didn’t raise more capital fast, it would literally go out of business.

Enter its savior…

Softbank To The Rescue

To make sure it would recoup its multi-billion-dollar investment, yesterday, Softbank decided to invest even more into WeWork.

And in exchange, it’s effectively taking it over.

The thing is, its new investment values WeWork at just $8 billion.

That means it just wrote down the value of its prior investment by 80%.

Ouch.

266x Your Investment

Meanwhile, as I mentioned earlier, a different group of WeWork investors is still smiling.

Even at today’s low valuation, these investors are sitting on a gain of 266x their money.

That’s like turning $5,000 into more than $1 million.

Who are these investors?

Those who invested in WeWork when it was just a tiny startup!

You see, because they got in so early, they were able to buy their shares very cheaply.

The Early Bird Gets the Returns

And that’s the key to startup investing:

Getting in early.

That’s why, at Crowdability, we focus on showing you early-stage deals. These are the deals that have the most upside potential.

Now, to be clear, deals like this also come with certain risks…

But that’s why we provide you with various tools that can help you weed out the bad companies, and focus on the ones with the most upside, and the least risk.

You can learn more about how we approach early-stage investing here, in the free Resources section of our website »

Happy Investing

Best Regards,
Matthew Milner

Founder
Crowdability.com

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Tags: Early-stage Investing WeWork

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