Insta
WeWork Likely To Sharply Reduce Its IPO Valuation To $20 Billion As Skeptical Investors Raise Questions Over Growth Prospects
Swarajya Staff
Sep 06, 2019, 05:36 PM | Updated 05:35 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
The office-rental company WeWork is likely to drastically slash its valuation to $20 billion for its upcoming initial public offering IPO, The Wall Street Journal has reported. The company was earlier valued at $47 billion figure when it received its last round of funding from Japan’s SoftBank.
WeWork may also defer its IPO which it was planning this fall and instead go public in 2020.
Ever since the company indicated its plan to list in the stock market, prospective investors have raised questions over the ability of the shared office provider to become profitable anytime soon. WeWork reported net losses of $1.9 billion for 2018.
Several questions have been raised on the company's adherence to corporate governance norms.
The company’s founder Adam Neumann has come under intense scrutiny for possible conflicts of interests over receiving a payment of $6 million from the company for the trademark rights to the “We” branding.
The company's pre-listing filing with regulators reveals that a total of $20.9 million in lease payments were made to four properties in which Neumann had an interest. The founder received $11.6 million back in “tenant improvement reimbursements” till last year.
WeWork has also been projecting itself as a tech company rather than as a real estate company. Tech companies typically are valued at much higher amounts than real estate companies. For instance, WeWork's main competitor IWG has a market capitalisation of £3.7 billion despite having a larger footprint in the commercial office rental space.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Introducing ElectionsHQ + 50 Ground Reports Project
The 2024 elections might seem easy to guess, but there are some important questions that shouldn't be missed.
Do freebies still sway voters? Do people prioritise infrastructure when voting? How will Punjab vote?
The answers to these questions provide great insights into where we, as a country, are headed in the years to come.
Swarajya is starting a project with an aim to do 50 solid ground stories and a smart commentary service on WhatsApp, a one-of-a-kind. We'd love your support during this election season.
Click below to contribute.