WeWork IPO Gets Pushed Back Yet Again

WeWork IPO

WeWork IPO delays going public yet again…

According to CNBC on Monday, office-leasing company WeWork IPO again is delayed again after poor reception from investors. The company originally planned to start marketing its share sale on Monday and to list its shares in the following week.

But these plans have been pushed back to an unspecified date. The Wall Street Journal reported that WeWork could wait until mid-October at the earliest to begin promoting its share sale.

In a statement, the company said, “The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year. We want to thank all of our employees, members, and partners for their ongoing commitment.”

Following the news, the value of WeWork’s bonds fell significantly, indicating that investors have lost some faith in the company.

No Due to Softbank

This delay comes shortly after news that SoftBank, WeWork’s largest investor, called on The We Company to delay its IPO plans.

However, CNBC reported on Tuesday that tension between SoftBank and WeWork wasn’t the reason for the IPO delay. Instead, the delay comes after The We Company’s valuation dropped sharply since its previous $47 billion valuation.

WeWork’s IPO valuation could fall to as low as $10 to $12 billion, according to some reports.

Though SoftBank may not be the reason for this delay, there are reports of some existing investors — including SoftBank — pushing WeWork to delay its IPO until next year. As a result, this delay may last even longer than anticipated.

Growing Concerns

WeWork’s IPO delay may be the result of growing investor concerns. In the past several months, The We Company has faced scrutiny due to concerns regarding governance and profitability.

Governance Changes

Leading up to the company’s IPO, WeWork has faced extensive scrutiny due to its corporate governance. In response to this scrutiny, the company is taking a number of steps to improve its governance and ease investor concerns.

WeWork announced earlier this month that CEO Adam Neumann returned approximately $5.9 billion in stock due to concerns regarding his controlling ownership in The We Company.

And, in the company’s amended S-1 filing, it revealed that it’s changing its high-vote stock to 10 votes per share. That’s down from 20 votes per share. The move is a play to reduce Neumann’s voting power.

The company also eliminated a provision that Neumann’s wife would be allowed to search for his successor in the event of death or permanent disability.

The We Company also appointed its first female director to its board.

Profitability

Investors are still concerned … Can WeWork turn a profit? Like many other startups, The We Company operates on an unproven business model. And its losses are widening.

The company’s revenue more than doubled in 2018, rising to $1.82 billion. But losses also increased by 104% to $1.93 billion. WeWork claims its office locations are profitable once up and running and that its growing losses are due to rapid expansion.

WeWork president Artie Minson stated, “We can very much, if we chose to, moderate our growth and become profitable. But it’s a time for us to continue to accelerate.”

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