Shares of WeWork (WE 9.27%) had gained 11.5% as of 11:15 a.m. ET for no obvious reason, although there appear to be several reasons driving the move.
This morning, WeWork disclosed in a regulatory filing that CEO Sandeep Mathrani purchased 29,600 shares of the company on Friday at a price of $8.45 per share. Insider buying, particularly from the CEO, tells the market that management is bullish on the company and thinks shares are undervalued.
Additionally, on Friday, the market-research company Hedgeye added WeWork as a new best long-buying opportunity. Hedgeye analyst Rob Simone said that WeWork's earnings before interest, taxes, depreciation, amortization, and restructuring (EBITDAR) could more than double on a year-over-year basis in 2022, which would also likely result in a doubling of the stock price.
It's not exactly easy to get behind a company like WeWork with such a troubled past. But sometimes, turnaround stories can result in the best investment ideas. The valuation of WeWork is now much more reasonable. The company's stock is trading at a market cap of less than $7 billion, compared to a valuation of $47 billion when former embattled CEO Adam Neumann ran the company.
Plus, the WeWork concept of offering flexible, short-term office leases is much more appealing now after the pandemic when you consider the work-from-home trend, so I'm cautiously optimistic about the stock.