TROOPS, Inc.'s Asian Gambit: A Calculated Bet on Flexible Workspaces

TROOPS, Inc.'s recent acquisition of a 49% stake in WORK, Inc., a Taiwanese co-working space operator, marks a bold strategic shift into Asia's flexible workspace sector. The deal, structured through convertible notes linked to TROOPS' equity, raises critical questions about its valuation mechanics and long-term growth potential. At a time when post-pandemic work dynamics are reshaping real estate markets, this move could position TROOPS as a key player in a sector ripe for innovation—or leave it exposed to volatile equity valuations.

The Deal's Unconventional Valuation Structure

The acquisition's most striking feature is its reliance on convertible notes priced at 80% of the lower of two metrics: TROOPS' pre-signing share price or its 60-day average prior to signing. This mechanism effectively ties the purchase price to TROOPS' equity performance rather than traditional valuation multiples like EV/EBITDA or revenue. By doing so, the company avoids committing to a fixed price, instead aligning the cost with its stock's market value at the time of execution.

The structure also includes a put option for the vendor to sell the remaining 51% of WORK, Inc., creating a potential future obligation for TROOPS. This staged approach introduces flexibility but adds uncertainty, as future valuation terms could be renegotiated under different market conditions.

Strategic Imperatives: Why Asia?

TROOPS' push into Asia is no accident. The flexible workspace sector in Taiwan and Hong Kong is booming, driven by rising demand for hybrid work models and tech-driven office solutions. WORK, Inc.'s existing base in Taiwan, combined with the obligation to develop a 7,000-square-foot co-working space in Hong Kong, positions TROOPS to capitalize on this trend.

The deal's dedicated mobile application requirement underscores its focus on integrating technology into workspace management—a hallmark of TROOPS' broader financial technology portfolio. This synergy could enhance operational efficiency and customer retention, aligning with the company's AI-driven innovation strategy.

Valuation Benchmarks and Risks

While the deal lacks explicit EBITDA multiples, industry benchmarks offer context. In 2025, B2B SaaS firms with $1–3M EBITDA command multiples of up to 14x for recurring revenue businesses, particularly those leveraging AI. By contrast, co-working spaces—a less capital-light sector—might trade at lower multiples, though their strategic value could justify premiums.

Volatility in TROOPS' equity could significantly impact the deal's effective cost.

The key risk lies in TROOPS' share price. If its stock declines, the convertible note pricing formula could reduce the effective purchase price, but it also reflects weaker market confidence. Conversely, a rising stock price would increase the cost of the remaining 51% stake, testing TROOPS' liquidity.

Growth Potential: Riding Asia's Workspace Wave

Asia's flexible workspace market is projected to grow at a CAGR of 8–10% through 2025, fueled by urbanization and tech adoption. Hong Kong's high concentration of multinational firms and startups makes it an ideal hub for premium co-working spaces. TROOPS' ability to execute on its obligations—particularly the mobile app and Hong Kong facility—will be critical to unlocking this potential.

Moreover, the put option's terms could incentivize WORK, Inc.'s vendor to support TROOPS' integration, as selling the remaining stake becomes more attractive if TROOPS' equity appreciates. This mutual interest creates a potential win-win scenario.

Investment Considerations

Investors should monitor two key factors:
1. TROOPS' stock performance: A sustained rise would validate the equity-linked pricing model but could strain liquidity for future acquisitions.
2. Operational execution: The success of the Hong Kong co-working space and mobile app will determine whether the deal creates long-term value.

Industry benchmarks suggest TROOPS could justify high multiples if the deal drives recurring revenue.

For now, the acquisition appears less about traditional valuation metrics and more about strategic positioning. TROOPS is betting that its tech-driven ecosystem will amplify the value of physical workspaces—a vision that could pay off if hybrid work remains dominant.

Conclusion

TROOPS, Inc.'s move into Asia's flexible workspace sector is a high-risk, high-reward play. The equity-linked structure mitigates upfront costs but exposes the company to stock price volatility. If executed well, the deal could transform TROOPS into a leader in tech-integrated workspaces, leveraging its AI expertise and regional footprint. Investors should view this as a long-term bet, with returns contingent on both market conditions and operational execution.

Investment advice: Hold TROOPS' stock if you believe in its tech-driven growth narrative and the enduring demand for flexible workspaces. Monitor equity trends closely and evaluate the Hong Kong project's progress as key milestones. For the cautious, this remains a speculative play—best suited to those with a tolerance for strategic gambles.