IWG share price retreated after earnings: is it safe to buy the dip?

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on Mar 6, 2024
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  • IWG, a rival to WeWork, is doing well as hybrid work demand rises.
  • The company reported strong revenue and profitability growth.
  • It is also considering shifting its listing base from London to New York.

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IWG (LON: IWG) share price continued retreating after the company published its financial results and expressed hopes to decamp to the US. The stock retreated to 171.6p on Tuesday, down from the year-to-date high of 202.4p. 

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WeWork rival is thriving

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IWG, the biggest flexible working company, announced strong financial results, showing signs that it is benefiting from the collapse of WeWork.

The company said that its revenue surged to its highest point on record as demand for flexible workspace rose. 

Its EBITDA jumped by 34% jumped to £403 million as its revenue soared and the company continued its cost cuts. Its gross margins rose from 20.3% in 2022 to 24.9% in 2023, leading to a gross profit of £589 million.

Further, the company believes that its business is highly undervalued as it expects its EBITDA will rise from over £400 million in 2023 to almost £1 billion in the medium term.

IWG has also made some more improvements in the past few months. It reduced its net debt by £104 million and restarted its dividend payments.

The other notable news was that the company is planning to shift its listing from London to the United States.

In a presentation, the management believes that the London listing has severely undervalued the company. It believes that it should have similar valuation metrics to other companies like Uber and Airbnb. 

The management believes that it has a total addressable market of $2 trillion as more workers prefer hybrid workspace. 

If this happens, it will be a big blow to London, which has struggled to attract and retain companies. Some notable names like CRH have abandoned their London listing while Indivior and TUI have planned to shift to other exchanges.

IWG has succeeded where WeWork failed because of its business model. Unlike WeWork, the company has embraced a hybrid model, where it has its locations and franchises the rest. WeWork, on the other hand, used a model that left it on the hook for all its leases.

Its most recent results showed that its managed & franchised system-wide revenue rose by 16% to £427 million in 2023. Its company-owned and leaded revenue soared by 6% £2.58 billion while its Worka revenue surged by 18% to £319 million.

IWG share price forecast

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IWG share price

IWG chart by TradingView

IWG, the parent company of Regus and Worka, has risen from its 2022 low of 111.3p in 2022 to a high of 180p. It has now retreated from the year-to-date high of 202.4p to the current 180p. The stock has also formed an inverse head and shoulders pattern, which is a bullish sign.

The current level of 180p is notable because it was its highest swing on August 30th last year. It has also moved slightly below the 100-day Arnaud Legoux Moving Average (ALMA).

Therefore, the outlook for the IWG share price is mildly bullish, with the initial target to watch being the YTD high of $202.4. A break above this resistance will open the possibility of rising to the psychological point at 220p.

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