WeWork (WE) delivered Q1 2022 results that exceeded its internal targets. While it remains in the loss, cost controls seem to be bearing fruit. WE stock jumped more than 10% to close at $5.63 on May 12, following the release of the Q1 report.
The New York-headquartered WeWork provides shared office spaces. People looking for a workspace can rent a desk. The company went public in 2021 through a SPAC merger after an earlier IPO plan was aborted.
Q1 Earnings at a Glance
Revenue jumped 28% year-over-year to $765 million but fell slightly short of the consensus estimate of $768 million. Loss per share narrowed sharply to $0.57 from $14.34 loss per share in the same quarter the previous year, and also came up better than Wall Street’s expectation of $0.71 loss per share.
Cost control efforts paid off for the company, as total expenses nearly halved to $1.1 billion from $2.1 billion a year ago. WeWork has cut jobs and closed some locations in cost-reduction efforts. The company ended the quarter with $1.6 billion in liquidity, consisting of $519 million in cash on hand and the rest in credit arrangements.
WeWork CEO, Sandeep Mathrani, said, “Having built a more sound and disciplined operating model, WeWork is well-positioned to capture demand, grow occupancy, and achieve revenue goals established at the beginning of 2022.”
Q2 Outlook
WeWork boosted the low-end of its Q2 revenue target to $800 million, up from $775 million previously. It anticipates revenue of as much as $825 million in the quarter. The company also raised the low-end of its 2022 full-year revenue guidance to $3.4 billion from $3.35 billion previously. It expects revenue of as much as $3.5 billion for the year.
Wall Street’s Take
The rest of the Street is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on two Buys. The average WeWork price target of $9.50 implies 68.7% upside potential to current levels. Shares have declined about 40% year-to-date.
Stock Investors
TipRanks’ Stock Investors tool shows that investor sentiment is currently Very Positive on WeWork, with 7.8% of portfolios tracked by TipRanks increasing their exposure to WE stock over the past 30 days.
Key Takeaway for Investors
The hybrid work model, where people have the flexibility to either report to company offices or handle their tasks remotely, presents a great business opportunity for WeWork. The cost control efforts could also help accelerate the company’s path to profitability.
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