The IWG share price has collapsed this week, making it one of the top laggards in the FTSE 250 Index. It plunged from a high of 233p on August 15 to a low of 187p, down by 20%. This article explores whether this dip is worth buying as its buybacks continue.
International Workplace Group crashed after earnings
IWG, formerly known as Regus, is one of the biggest players in the office industry globally. Its model is similar to that of WeWork in that it leases large spaces and then rents them to either individuals or corporates.
The main difference with WeWork is that it offers several brands, including Regus, Signature, Spaces, HQ, Basepount, and Shop & Work. Also, its franchise model has helped it to establish its business around the world.
IWG share price crashed on Tuesday after it published its financial results. Its report showed that the system-wide revenue rose to $2.16 billion in the first half from $2.12 billion in the same period last year.
However, the group revenue dropped from $1.87 billion in H1’24 to $1.85 billion in H1’25.
Still, the management’s cost strategies helped it to boost its profitability, which came out higher than expected. The adjusted EBITDA rose to $262 million, while the operating profit remained at $68 million.
Most of IWG’s growth came from its managed and franchised business, whose fee income jumped by 43% to $50 million, and its system revenue rose by 43% to $50 million.
Most importantly, the company increased its distributions to investors as it expects its free cash flow to jump by 40% to $140 million. It boosted its buyback program to $130 million.
Benefiting from hybrid work, but risks remain
IWG is benefiting from the ongoing shift in the business environment as more companies focus on hybrid working. Hybrid refers to where staff work in the office and also at home.
The company has also benefited slightly from the collapse of WeWork, a company that aimed to disrupt it. At its peak, WeWork operated thousands of locations, which has now scaled to 586 as it attempts to comeback.
IWG believes it has more room to grow due to the total addressable market, now valued at over $2 trillion.
Therefore, there are signs that the IWG share price crash was not justified. In a statement, Chris Dixon, the CEO said:
“It is a strange reaction on the share price. It looks like it is machines selling … it is not rational,”
IWG share price analysis
The daily timeframe chart explains why the IWG stock price crashed after its earnings. This chart shows that the stock was forming a rising wedge and a bearish divergence before the earnings.
The rising wedge pattern comprises of two ascending and converging trendlines. A bearish breakdown normally happens when the two lines are about to converge.
The percentage price oscillator (PPO) and the Relative Strength Index (RSI) were also moving downwards as the stock surged. Fortunately, the stock has crashed to the wedge target, meaning that it may rebound soon and resume the uptrend.
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