After Lyft received a warm reception for its initial public offering last week, it ended its second day of trading with a 10% plunge that fell below the IPO price.
Now, many tech IPOs are seeing their public offering opportunity fading away. A perfect example of this is The We Company, who has yet to file a public offering, but was expected to be going down that path.
Japanese-based conglomerate company SoftBank pulled back from what was intended to be a $16 billion investment into WeWork down to $2 billion, leaving many lenders scratching their heads. Still, the company received a $47 billion valuation.
Additionally, the company announced it had doubled its revenue and losses to about $2 billion each last year. Despite this, WeWork CFO Arte Minson said the company would continue its massive global expansion.
“They can keep this going until their business model gets tested by an economic downturn or until investors start asking questions about it,” said Jesse Rosenthal, a credit analyst with CreditSights.
Considering these factors, public equity may be WeWork’s best option in order to maintain growth.