Stocks Slide Under Treasury Yield Pressure

Dow: -0.31% | Nasdaq: -0.11% | S&P: -0.32%

Catch Up Quick

• The 10-year Treasury Yield notched a 14-month high

• The large ocean vessel blocking the Suez Canal has finally been freed

• Cathie Wood's Ark ETFs removed a 30% cap on how much of assets could be invested in securities of a single entity

• Lululemon ($LULU) forecasts better-than-expected sales as digital business accelerates

• 90% of U.S. adults will be eligible to get a COVID-19 vaccine in 3 weeks

• Spotify ($SPOT) acquired Clubhouse rival Betty Labs (known for their app “Locker Room”)

• Southwest Airlines ($LUV) is buying 100 new Boeing 737 MAX jets

• Volkswagen won’t rebrand U.S. unit as Voltswagen

• The FTC sued to block Illumina’s ($ILMN) acquisition of Grail

• Nike ($NKE) filed a trademark infringement lawsuit against Lil Nas X’s “Satan Shoes”

• Amazon ($AMZN) workers in Alabama are set to vote on unionization today

• Losses from hedge-fund Archegos Capital Management triggered the liquidation of >$30B in positions

Thought of the Day

• WeWork, the notorious on-demand office space leasing company recently announced plans to go public via a SPAC at a ~$9B valuation

• The news comes nearly 2 years after WeWork’s botched ~$47B IPO brought to light numerous structural issues within the companies finances and upper management  

• WeWork makes money by renting via long-term leases, renovating and modernizing office spaces before re-renting at higher rates to enterprises, small businesses, start-ups, or even individuals in return for greater flexibility

• Embroiled in controversy, WeWork was once a laughing stock amongst both the tech and finance realms, ridiculed for its unorthodox CEO coupled with a questionable business model and significant financial losses 

• This time around however, WeWork’s value proposition warrants greater consideration as the global pandemic paradoxically has accelerated trends in which WeWork is well-positioned to capitalize

• While work-from-home has seen significant adoption over the past year, according to JLL, ¾ of workers still want to return to the office, with an altered preference towards hybrid / dynamic work environments 

• As such, enterprises both large and small are likely to be less interested in committing to expensive long-term leases and instead favor shorter leases and smaller / more flexible workspaces without the need to accommodate every employee 5+ days a week (WeWork)

The Bottom Lines

• Short-term leasing is inherently a volatile and risky market to pursue

• But new leadership, fresh funding, and a first-movers advantage gives WeWork a unique opportunity to get ahead of workspace trends catalyzed by the pandemic 

• While such a thesis is not complete without extensive financial due diligence, what was once a vanguard meme source might become a serious contender within an ever evolving commercial real estate landscape!

  Afternoon Audit