Broker’s call: WeWork (Buy)

A prominent brokerage firm has upgraded its rating on WeWork to a 'Buy', citing a significant shift in the company's business model. While the iconic flexible office spaces remain central to the brand, the firm notes that WeWork is successfully expanding its managed services vertical. This segment, where the company manages spaces for other landlords, now generates over 20% of total revenue.

This development is important for investors as it signals a move beyond a reliance on physical assets. By offering management services, WeWork can generate recurring income with lower capital expenditure. It diversifies the revenue stream and reduces dependence on leasing new spaces, potentially making the business more resilient to market fluctuations.

Investors should watch the pace of growth in the managed vertical and the company's ability to maintain margins. A continued increase in this segment's contribution to revenue could validate the brokerage's positive outlook and suggest a more stable, service-oriented future for the company.