Vanity Fair New Establishment Summit 2018 - Day 1

Founder of Soho House, Nick Jones (Matt Winkelmeyer/Getty Images)

Weird Money

Maybe a new owner can help save the vibes at Soho House

A new potential buyer thinks the public markets have undervalued the social club.

12/19/24 12:42PM

Founded in 1995 by British restaurateur Nick Jones, Soho House used to be the epitome of cool-members clubs, and its status in the US was amplified when the club’s Meatpacking location was featured in “Sex and the City” in 2003.

Its members included celebrities like David Beckham and Tom Cruise, and it was notoriously hard to join (and remain a member of) the club. In 2010, the New York Post reported that the club, which had 4,500 members at the time, had purged 500 members, and Jones hoped to reduce it to 4,000, saying, “We are trying to get the club back to its creative roots.”

Soho House was originally an escape from the finance and business worlds, with Jones saying that he wanted to see “less suits lounging about” and that the exclusivity of the club was part of its allure. Everyone wants what they can’t have, after all. That was nice while it lasted.

Today, Soho House has 208,078 members (and 267,494 total members, which includes lower-tier memberships like Soho Friends that provides limited access to clubs), a far cry from the company’s exclusive roots, and last December, the New York, LA, and London locations temporarily stopped accepting new members because they became overcrowded. While the explosion in growth led to an uptick in revenue, it came with a cost: according to more than a dozen New Yorkers interviewed by the New York Post earlier this year, Soho House isn’t cool any more.

Soho House’s issue is that it had no business being a publicly traded company. After Nick Jones founded the company in 1995, its majority ownership changed hands a couple times, first to British business mogul Richard Caring in 2008, then to US billionaire Ron Burkle in 2012. In 2021, the company filed to go public, planning to use the IPO proceeds to pay down debt and finance further expansion. However, since going public at $14 per share, Soho House has struggled in the public markets, with its stock price sitting at $4.90 earlier this week.

However, the stock jumped 54% today, up to $7.70, on news that a third-party consortium had offered to buy it for $9 per share. The offer came after Yucaipa, the investment firm of the company’s executive chairman, Ron Burkle, conducted a strategic review showing that the public markets were undervaluing the company.

A take-private deal would probably be good for Soho House, which has found itself floundering in the gray area between exclusive and mass market. Soho House’s origins valued exclusivity over everything, but public-company shareholders don’t care about “coolness” or “vibes” — they care about tangible metrics like revenue and profit, so Soho House prioritized growth over everything else. As a result, membership numbers exploded, going from 127,800 members in Q2 2021, when the company went public, to 267,494 members in Q3 of 2024.

Ironically, despite the uptick in members, which coincided with revenue growth from $124 million to $333 million in that time, the company has struggled to make money. Soho House has lost a cumulative $590 million since going public, only generating a profit in two quarters: $13 million in Q4 2022 and a measly $175,000 in Q3 2024.

Of course, this shouldn’t be surprising. An exclusive, luxury company can command high price points from an affluent customer base, and that branding power translates to strong margins. This is what has made LVMH so successful.

On the other end of the scale, mass-market companies with lower margins can succeed on high volume. This is how Walmart has grown to a $754 billion market capitalization. Walmart’s profit margin sits between 2% and 3%, but with trailing 12-month revenue of almost $700 billion, it still generates impressive profits. When you get caught in the middle, a formerly exclusive business that has grown to over 200,000 members, you lose the ability to play the luxury game (Soho House is “uncool” now!), but you’re still not a mass-market product.

Soho House chased growth without figuring out its unit economics, so while its revenue and membership numbers exploded, the company generated quarter after quarter of net losses. Three years after going public, the company has more than doubled in size, but still lost $136 million over the last four quarters.

Maybe a take-private deal would give the company a chance to take a step back and figure out what exactly it wants to be. Charging customers $5,200 a year so they can spend $25 per espresso martini at an understaffed, overcrowded bar in Meatpacking hasn’t been a winning formula.

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Luke Kawa3h

US job growth crushes estimates in March, with the unemployment rate unexpectedly dipping to 4.3%

US hiring surged in March, with job growth of 178,000 well ahead of estimates while the unemployment rate unexpectedly edged down to 4.3%.

Economists had anticipated non-farm payrolls growth of 65,000 for the month with the unemployment rate holding steady at 4.4%

Event contracts had presumed that job growth would come in between 70,000 and 80,000, a sunnier view than Wall Street.

Prediction markets had anticipated roughly 70% odds that the unemployment rate would hold steady at 4.4%, with a much higher implied likelihood of an increase versus a decrease.

(Event contracts are offered through Robinhood Derivatives, LLC — probabilities referenced or sourced from KalshiEx LLC or ForecastEx LLC.)

S&P 500 equity futures, which were modestly negative ahead of the report in thin holiday trading, were little changed in the immediate aftermath of this release. Treasury yields jumped, with the 10-year yield rising to 4.35% from 4.31%.

The inflationary impact of the higher crude prices in the wake of US-Israeli attacks on Iran and the subsequent challenges shipping oil through the Strait of Hormuz has been the dominant macroeconomic development of the past month, rather than US labor market data.

Before the conflict began, roughly 60 basis points of easing by the Federal Reserve was priced in for 2026. Heading into this release, that’s slimmed to just 5 basis points as US gas prices jumped above $4 per gallon.

The Federal Reserve’s “dot plot” from the March meeting still suggests that officials think it will be appropriate to lower the policy rate this year if the economy unfolds in line with their expectations.

The February jobs report had been a big disappointment, with jobs unexpectedly contracting and the unemployment rate edging higher. With this release, the February figures were revised to show an even larger decline of 133,000.

Strikes which had weighed on employment in health care during February, a critical source of US employment growth in recent years, seemingly reversed. The industry accounted for more than half of net job growth for March.

Tasha Matsumoto

20h

Stocks eke out gains on hopes for a path forward for reopening the Strait of Hormuz

Stocks rebounded on news that Iran is drafting a protocol with Oman to “monitor transit” through the crucial Strait of Hormuz.

Matt Phillips22h

AI server cluster maker Penguin Solutions takes flight

Small-cap AI server cluster maker Penguin Solutions surged Thursday after posting better-than-expected Q2 revenue and profit numbers Wednesday after the close, along with an increase in full-year sales and profit guidance.

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

Its Advanced Computing division designs and sells computers, cabling, and cooling systems, the server racks and clusters of racks AI data centers need. Its other main division sells flash and DRAM memory products.

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

The stock is volatile. Penguin dove during last year’s tariff tantrum that followed “Liberation Day” in April. Then it turned tail and doubled through early October amid a surge of call options activity, which tends to reflect retail interest. From the October peak, it then plunged by about 50%, before Thursday’s renaissance.

For what it’s worth, call options activity in Penguin is pretty busy today, too — relatively speaking — with roughly 2,625 traded as of 1:15 p.m. ET. That’s the most since early January, when the company last reported quarterly numbers. The average volume over the previous 25 trading sessions is about 325 calls a day, FactSet data shows.

Penguin Solutions Stock Takes Off On AI Bolstered Outlook

The company, which was known as Smart Global Holdings until July 2024, has positioned itself as a provider of “end-to-end AI infrastructure solutions.”

It’s a pretty small company, with a fully diluted market cap of just over $1 billion and roughly 2,900 employees, according to FactSet.

Luke Kawa4/2/26

Momentum returns to optics stocks as the release valve for AI optimism

Potentially imminent end to the war? Buy optics stocks.

Maybe not? Buy optics stocks anyway.

Effectively all the juice left in the AI trade is coming from optics (and memory) stocks. And the latter group is taking a bit of a breather today while the former continues to surge.

Shares of Ciena Corp., Lumentum, and Coherent are building on recent big gains and among the biggest gainers in the S&P 500 near midday, while Applied Optoelectronics is also surging on Thursday.

These companies all provide solutions that help information move around in data centers, and thus are key beneficiaries of the aggressive capex plans of hyperscalers. Nvidia has invested $2 billion apiece in Coherent and Lumentum in deals that also include purchase commitments.

Matt Phillips4/2/26

Space stocks rip during a topsy-turvy day for the equity market

Satellite-services-from-space stocks surged Thursday after reports that Amazon is in talks to buy Globalstar, which provides voice and connectivity services from its satellite network. It also can’t hurt that the general mood around space is ebullient, following the successful launch of Artemis II on Thursday.

Planet Labs and ViaSat also soared on the news.

The gains for EchoStar — seen as a backdoor play at pre-IPO SpaceX exposure — and Rocket Lab were more muted, perhaps because a deep-pocketed competitor like Jeff Bezos getting serious about space services could complicate the plans of the two largest commercial space launch companies.

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Tesla CEO Elon Musk’s SpaceX is the dominant provider of such services, and the early rumors on the company’s planned IPO — expected to be the largest ever — suggest the market is very excited about the prospects for the industry.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

Globalstar surges after FT reports that Amazon is in talks to buy the satellite group

Rocket Lab and SpaceX see launch services as key to their aspirations of being major providers of voice and data services from low-Earth orbit satellites.

Elsewhere in the space stock world, Intuitive Machines — a maker of space infrastructure that provides services to NASA for lunar missions — also rose.

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