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Shares of Soho House (NYSE: SHCO) -- previously known as Membership Collective -- fell more than 19% on Wednesday after the membership-based luxury hotel and clubs operator fell into the crosshairs of a noted short-selling firm.

Is Soho the next WeWork?

Soho House's stock price has languished since the company went public in 2021. Revenue in its most recent (third) quarter grew 13.1% year over year to $301 million, including a more than 31% increase in membership revenue to $93.3 million. Its total membership count increased 20.8% year over year to just over 255,000. That growth translated to a quarterly net loss of $42.4 million. However, Soho House also saw adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) nearly double on a year-over-year basis to $42.1 million.

In a short report released this morning, short-selling firm Glasshouse Research mused that Soho House is "a company with a broken business model and terrible accounting, [and] faces material headwinds regarding its future viability as a public company."

Glasshouse also highlighted Soho House's rising debt levels, arguing that the company will need to continue diluting existing investors to raise capital and stay afloat.

"Eerily similar to WeWork's public offering, we believe SHCO will eventually meet the same fate as the now defunct co-working space," Glasshouse concluded.

What's next for Soho House investors?

Soho House management hasn't formally responded to the report as of this writing. But if the timing of Soho House's previous earnings releases is any indication, the company should be set to announce fourth-quarter and full-year 2023 results in early March.

Of course, investors should note that Glasshouse Research holds a short position in Soho House and stands to benefit from any declines in its stock price. But with WeWork's widely publicized bankruptcy late last year still fresh on skittish investors' minds, it's no surprise to see Soho House stock plunging to new lows today.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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