Some investors are worried about skepticism surrounding WeWork's business model and want its planned initial public offering to be pushed to 2020, sources said Photo: AFP/File
business

Office sharing startup WeWork plans to cut valuation to below $20 bil

6 Comments
By TIMOTHY A CLARY

Fast-growing office-sharing startup WeWork plans to again cut its valuation, this time to below $20 billion, and is under pressure from some investors to postpone its stock market debut, sources said Sunday.

It is the second time in three days that the company has cut its valuation target, after sources said Thursday that its parent The We Company was revising it down from $47 billion to $20 billion over doubts about its prospects from potential investors.

Some investors are also worried about skepticism surrounding the company's business model and want its planned initial public offering to be pushed to 2020, sources said on condition of anonymity.

JPMorgan Chase and Goldman Sachs, the two main underwriters for the initial public offering, will hold a number of meetings with each other and investors to try to ease their fears.

A roadshow to market the shares to new investors that was supposed to kick off on Monday is in doubt, and there are chances that it will not happen that week, sources said.

WeWork declined to comment.

Investors doubt WeWork's ability to make money fast enough and also wonder if the company is solid enough to withstand a slowdown in the global economy, sources said.

The New York-based startup that launched in 2010 touts itself as revolutionizing commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.

The company lost $1.9 billion last year with revenues of $1.8 billion.

WeWork has ventured into new areas like residential apartments and education, and tells investors they should see its quarterly losses as investments.

But certain moves by co-founder Adam Neumann, such as personally investing in real estate before renting it back to WeWork, have also caused consternation.

The co-working company, which calls itself a pioneer in the "space-as-a-service" business, provides office space decorated with bright colors and industrial themes, offering free coffee, e-supplies and utilities.

© 2019 AFP

©2019 GPlusMedia Inc.

6 Comments
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Office subletting has been around for ages, so dont know what all the fuss over WeWork is about.

3 ( +3 / -0 )

Office subletting has been around for ages, so dont know what all the fuss over WeWork is about.

So has paying people to pick you up in a car and driving you to a destination, and yet Uber managed to become huge even though there had previously been an existing taxi industry.

The idea of subletting office space has been around for ages, but it's how wework does it that is different.

-1 ( +0 / -1 )

This IPO is gonna go off the rails. The principles get rich, the investors get soaked, the public picks up the tab.

1 ( +2 / -1 )

co-founder Adam Neumann, such as personally investing in real estate before renting it back to WeWork

Ha ha! - like a dodgey ponzi account setup.

1 ( +1 / -0 )

Founder is a bigger liability than anything else... changed the company name and the company had to buy the rights to the new name for $6million because they were already owned. The owner was the founder. How will any of the nonsense like that even pass the American security commission before listing?

You would have to be insane, or SoftBank, to even consider investing.

0 ( +0 / -0 )

The company lost $1.9 billion last year with revenues of $1.8 billion.

So the company actually lost $100 Million and they expect their initial offering, prior to it being lowered, at $47 Billion?

Why would someone want to invest in a business that is already loosing money prior to it being on the open market?

Also, knowing a little about how Japanese do business here, this company is not going to do well in any areas outside of Tokyo or Osaka (maybe) and their prospects for real growth are limited here. Renting office space here is not cheap, and for their plan to work, they need to be in highly traveled areas, which have even higher rental costs, so I find it hard to believe how they are going to make any money here in Japan. (There are a bunch of other reasons as well! Just mentioned one major one!)

0 ( +0 / -0 )

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