Market Overview

T.Rowe Price Calls WeWork 'Terrible Investment'

Share:
T.Rowe Price Calls WeWork 'Terrible Investment'

T. Rowe Price Group Inc. (NASDAQ: TROW) regrets investing in WeWork in 2014, it said in a filing with the SEC on Thursday.

What Happened

Asset Manager T.Rowe Price wrote a letter to its shareholders as part of its annual report and admitted that their “small private investment” in WeWork is a “terrible investment.” 

The company admitted that when it made the investment, they had an understanding that the management intended to “slow the company’s blistering pace of growth and focus instead on developing a more sustainable business strategy.”

The asset management firm said WeWork kept ignoring their advice.

T.Row Price revealed in its letter to investors in December 2019 that the WeWork CEO Adam Neumann had promised profitability was “just over the horizon.” Instead of taking him at his word, they expressed their displeasure to WeWork’s management and board. The company tried to exit its investment in early 2019 entirely, but WeWorks’ management refused to approve the underlying transactions. 

The failure of WeWork’s IPO has left T.Row Price holding shares a mere fraction of their “earlier value.”

Why It Matters

WeWork's biggest investor Softbank Group Corp (OTC: SFTBY), has also expressed a similar sentiment regarding their investment choice with WeWork, calling their judgment 'really bad.'

T.Row Price said that their cautious approach towards the private market had limited the damage and they seek to learn from their missteps.

As for whether WeWork’s new management can improve operations somewhat, the asset manager thinks, “it’s possible.” 

Price Action

T.Rowe Price shares were unchanged at $136.42  in the after-hours session on Thursday. The shares had closed the regular session 1.49% lower at $136.42.

 

Related Articles (TROW + SFTBY)

View Comments and Join the Discussion!

Posted-In: Softbank WeWorkEarnings News Legal Management Markets General Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com