Good Morning!
How crazy was that NFL Week 1! I still cannot get over my Cleveland Browns winning in dramatic fashion on a 58 Yard last second field goal by rookie Cade York! This was our first opening day win since 2004 & first opening day road win since 1994. If you did not get a chance to see the Browns game winning field goal, make sure to check it out here with the Titanic music in the background! BOOM!
Showtime! |
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Introduction One of the fastest growing trends in society is the rise in working from home/hybrid work set ups.
6/10 Americans share they work from home at least one day a week and 35% share that they work from home all week.
Being the “invest with your eyes” investor I am, I have spent a significant amount of time thinking about where I can get exposure to this trend.
The obvious ideas would be from co-working space companies like WeWork, Regus, Workbar, etc. However, we at The Crossover, always try to think a little bit deeper and different, and this led me to discover a venture that has unique exposure to this trend – Landing.
Landing is a short term rental venture that allows individuals to rent fully furnished apartments for as little as one month at a time. Landing is focused on the “nomadic” lifestyle that the new WFH trend has enabled.
Therefore, we are going to be comparing Landing (Private) to WeWork (Public) with the WFH trend being our north star. The question I want you to be thinking about while reading this writeup is if I gave you $100K, where would you rather invest it? Landing or WeWork.
Let’s do this! |
Overview Landing is a flexible, short term rental venture that allows individuals to rent fully furnished apartments for as little as one month at a time.
A couple weeks back, Landing announced that they had raised $75M in equity funding led by Delta V Capital as well as $50M in debt. Since its launch in 2019, the company has $237M in equity funding & $230M in debt. A valuation was not shared publicly after this raise. Some other key stats on the company include: - Rent apartments for a year then mark the price up by 40% to Landing’s customers
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Landing members can pay a $199 yearly fee to move to any Landing apartment as long as they give 2 week notice
- CEO Bill Smith (billed the anti-Adam Nuemman by TechCrunch)
- Company is not yet profitable
Finally, check this out from TechCrunch & CEO Bill Smith:
Eventually, Smith told us last week, Landing intends to sell its software directly to the multifamily property owners. “Over time, we’ll partner with owners to bring this product to their building, and it really won’t be a ‘Landing’ lease product,” he said. “They’ll just join the Landing platform. They’ll operate using our technology and our standards. And, and it won’t be this model of, you know, Landing leases it and is committed to that lease.”
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WeWork Off the bat, WeWork is a stock I have been following for quite some time as it fits precisely within my philosophy of “investing with your eyes.” The trend of working from home/hybrid work model is just getting started, and you would think that WeWork is the company to benefit from this. Only issue with WeWork? The stock has been incredibly overvalued. However, with the stock down 45% over the past 3 months, I thought Landing gave us the perfect opportunity to, at a very high level, check it out together. |
Takeaways: - COVID hit WeWork hard
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The company is returning to growth with ~30% growth YoY
- Adj. EBITDA loss has decreased significantly (credit to CEO Sandeep Mathrani who took over for Nuemman)
- Company expects to be adj. EBITDA positive by end of year
And what is the company’s valuation? Down to $3.2B – much more reasonable than the ~$7B market cap 3 months back. Simply put, I like the stock, but I do not love it. A couple more stats that I wanted to share that intrigue me about WeWork: - EBITDA loss will be down to only $50M-$140M in the back half of the year
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Currently @ 72% occupancy rate and expects to leave year @ 78% with long term projections of up to 82%!
With all of this positive momentum, if you gave me $100K to invest, I would rather put it in Landing over WeWork. Why? |
Landing > WeWork $16,417,000,000 is why Landing is > WeWork.
The $16B+ number represents the present value of the amount of long term lease debt that WeWork had on their books at the end of Q2. According to WeWork’s 2019 IPO Filing, the average US rental obligation for WeWork property is 15 years.
My takeaway? WeWork is a heavy heavy business. The amount of debt that the company has to take on in order to run their operations is tremendous.
On the other side of the coin, Landing is an incredibly light business. Currently, Landing only rents apartments from owners for up to 1 year at a time before looking to sublease it to the company’s users.
This model also gives Landing an incredibly flexible and low risk model. Is an apartment complex in Washington DC not working? Are the Florida apartments off the charts? After just a few months, Landing will be able to shift and allocate their resources accordingly. I love this and it is a stark contrast to WeWork’s approach.
Cherry on top? Remember that final quote/paragraph above in the Landing paragraph? In the long run, the company sees itself becoming much more of a SaaS/platform company which I am sure is music to investors ears.
For all of these reasons, I am going with Landing. Would you do the same? -Alan |
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Porsche Making Volkswagen Pretty? |
The Rundown: Porsche is expected to IPO 25% from its parent company (Volkswagen) @ a $60B-$85B valuation. Volkswagen's current market cap is only $87B! 3 Key Points: -
Volkswagen's US preferred shares are trading at just 4x 2022 projected earnings & pays a 5% dividend too
- Porsche generated 25% of Volkswagen's operating profit with operating profit margins of 20%
- Porsch could be valued @ 15-20x earnings while Ferrari is valued @ around 40x
Alan's Angle: At first glance, there could not be an opportunity more up my alley. A clearly undervalued stock with a 5% dividend is music to my ears. However, there are a lot of smart people covering the auto space, and I would not think it would be this easy to find money this easily. Additionally, the auto space is actually quiet a complex one when it comes to valuing. Example - Ford is trading @ .3x sales and pays a 3% dividend while Tesla trades @ 20x sales and no dividend.
An investment at this time in Porsche would be solely based off of this Barrons article and not because of a full DD process and because of that, we are passing on this opportunity. If I have some time to dive in however or hire an analyst, it might be a different situation.
Even though this pitch might be a hanging curve ball over the middle of the plate, I am just not that good at hitting off speed pitches! (True in real life too!). |
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Note: The Crossover Portfolio is a mock portfolio of how I would be investing and not with real money. All trades are shared publicly @ The Crossover Twitter as they are recognized. |
- Last week, we bought a pretty serious $FIGS & $PARA dip that is looking quite pretty right now!
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Spruce Capital released a 102 page short report on $FIGS. The stock is up 15% since. Here is a couple minute summary of their report
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Private portfolio pick, The Zone, announced partnerships with 7 new universities!
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Here are some jobs that I’m curating in finance and tech. Use this link to submit a role to be featured if you’re looking to hire.
Business & Strategy Manager, Alts @ Public
Public.com is an amazing platform that allows you to invest in any fractional asset from stocks to NFTs. The Robinhood competitor is looking for someone to be a pivotal part of their push into the NFT & crypto space!
Technical Product Consultant @ Capital One
Capital One is looking for someone to fill this client facing gig focused on technical products. Capital One blends the benefits of a massive bank/finance company with cutting edge technology and innovation.
Senior Strategic Finance Analyst @ Affirm
The publicly traded Affirm is looking for a Senior Strategic Finance Analyst. Affirm continues to be my favorite in the ultra-competitive BNPL landscape
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- This moment between Brian Daboll, Saquan Barkley, and Sterling Shepard is everything. I love Brian Daboll.
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Patrick Mahomes is always thinking about his teammates. Look at him scoop up Isiah Pacheco's first TD ball after he threw it away celebrating!
- One of the coolest celebrations I have ever seen on a football field
- Very good relationship advice for husbands with kids looking to manage football season
- Isaiah McKenzie doing a gender reveal after scoring a TD in an NFL game!
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Thanks for the read! Let me know what you thought by replying back to this email. — Alan
Disclaimer: The Crossover is not a professional financial service. All materials released from The Crossover are for educational and entertainment purposes. The Crossover is not a replacement for a professional's opinion. Contributors to the Crossover might have positions in the equities in the The Crossover Portfolio or mentioned in the newsletter. |
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