Soho House says it may go private after short seller slams publicly traded company

Soho House may take the members-only clubs private after a short seller doubled down on a declaration that the publicly traded company won’t turn a profit.

The evaluation by GlassHouse Research, released Wednesday, compared Soho House to now-defunct WeWork.

The report gave the New York-based company — which has more than 40 outposts around the world — a price target of zero.

Soho House said it “fundamentally rejects” the report, noting that it “contains factual inaccuracies, analytical errors and false and misleading statements.”

However, the company told The Post it “formed an independent Special Committee of the Board,” which will “evaluate certain strategic transactions” and may result in the company becoming private.

The rebuttal didn’t deter GlassHouse from maintaining its bearish outlook on Soho House.

GlassHouse Research initiated coverage of Soho House (Toronto location pictured) with a dismal $0 price target, likening the exclusive members-only club to now-defunct WeWork. Soho House

“We feel this company is not going to be profitable in the future,” GlassHouse’s director of research told The Post on Friday.

“They’re just generalities. They didn’t list anything specific.”

Soho House shares had plunged as much as 30% intraday, their steepest drop ever, after GlassHouse’s initial report.

It rebounded Friday, jumping nearly 13% to close at $5.62. The stock remains down more than 16% year to date.

Soho House rejects our report, says it has inaccuracies/errors, but does not list anything.The company also expects growth in its made-up metric Adjusted EBITDA, but says nothing about free-cash-flow or GAAP EPS. So, there you have it, more years of actual losses.
If they go… pic.twitter.com/iM1SdYkRnp

— GlassHouse Research (@GlassH_Research) February 9, 2024

“They may be exclusive, there may be waiting lists, but finances and accounting is our forte and we don’t see this company seldom turning a profit,” GlassHouse researcher, who only gave his first name, Wes, for safety purposes, told The Post.

A rep for Soho House declined to comment beyond the statement shared with the Post on Friday.

SoHo House memberships run upwards of $6,000 per year for those over 27.

Under-27 members will dish out around $2,600 to enjoy Soho House’s amenities, which include a rooftop terrace and pool, restaurant, screening room and roster of events for networking opportunities.

Soho House’s 40 locations (Hong Kong outpost pictured) offer pools and spas, in-club restaurants and plenty of opportunities to network with high-earning individuals. Soho House

GlassHouse suggested that Soho House would perform much better if it functioned like a country club.

Soho House operates completely “opposite of a country club, which is not public,” Wes said, noting that since going public in 2021, Soho House “needs to be growing to appease investors.”

Country clubs, meanwhile, “focus on themselves, don’t have to worry about growing and have disposable income from high earners in the 50-to-75-year-old category who have wealth.”

But Soho House is “going after a group of 20-to-35-year-olds — the group with the least amount of wealth,” Wes pointed out.

In addition, Soho House — which sees aspiring members turning in a recommendation letter and coughing up as much as $3,200 in initiation fees — is “not a family-friendly place.”

“Once members turn 35, they’re pushed out of the club,” Wes said. “There a lot of things working against the company, and it’s showing up in the numbers.”

“In the end, we think this company is similar to WeWork. It went public two years ago [and] dumped on the average investor.”

GlassHouse’s director of research, Wes, told The Post that Soho House (Barcelona location pictured) would fare better if it functioned more like a country club, and sought out members over age 35, who’ve accumulated more wealth.

In GlassHouse’s report, the firm said that Soho House’s timeline has been “eerily similar to WeWork’s,” which both had their initial public offerings in 2021.

WeWork has since filed Chapter 11 proceedings.

Soho House missed Wall Street’s expectations in its latest quarterly earnings report, released in November.

Revenue, which rang in at $301 million, missed analyst estimates by 1.4%, while earnings per share were -$0.22, which also missed analyst estimates by a staggering 147%.