IWG boss labels double-digit share price dive ‘not rational’
Shares in International Workspace Group (IWG) dropped more than 15 per cent today after a disappointing half-year trading update from the office provider.
It was the worst day for the world’s largest provider of serviced office space since the first day of lockdown in March 2020.
But boss Mark Dixon said the share price drop was “not rational”, arguing that IWG remained in a strong position.
“It is a strange reaction on the share price. It looks like it is machines selling … it is not rational,” he told the Guardian.
In its half-year report, IWG said earnings for the full year were likely to be towards the lower end of its $525m-$565m (£388m-£418m) range.
Dixon, who owns a quarter of the £1.9bn business, has seen the value of his stake drop by £96m.
Prior to 19 August, IWG’s share price had risen more than 42 per cent since the start of the year.
IWG commits to flexible working
Despite a push from some bosses to get employees back to the office, IWG said it still believed flexible working was the future of employment.
“Over the past few years, these more flexible ways of working have become the default model for a significant proportion of white-collar workers.
“With companies empowering their employees to work across multiple locations, splitting their time between local workspaces, a central office and home,” Dixon said in the half-year results.
“The days of needing to be tethered to a central HQ are behind us.”
IWG has also been transitioning to a ‘capital light’ model since 2023, which relies on flexible work. Heavy investment in this area is behind the caveat to its profit guidance.
Rather than buying or leasing its own office space to rent out, IWG is increasingly partnering with landlords, who hand over space in their buildings for the company to run as a serviced office.
The model, championed by Dixon, enables IWG to open more offices more quickly and without the cost, while still collecting a slice of the rents and management fees.
It accounts for almost all IWG’s new openings between January and June.
RBC analysts said they “remain positive” and rated the stock an ‘outperform’.
“[We] think IWG should benefit from better disclosure and lower capital intensity going forward,” analysts said.