Once upon a time, WeWork was seen as a shining trophy that was changing the office space industry indefinitely. With a $47 billion valuation and a goal to โelevate the worldโs consciousness,โ it seemed that the company was unstoppable down its path towards a successful initial public offering.
But just in the last week, the companyโs valuation has been slashed by over half. Now, it is uncertain that the IPO will move forward at all. This, along with other worrying practices revealed in its prospectus, are likely the reasons that WeWorkโs biggest shareholder SoftBank is urging the company to hold off on the IPO.
This could be a good thing for the market, as the past few years have seen several venture capitalists eagerly funding losses until they could exit their positions through a profitable IPO. This has led to numerous private companies achieving โunicornโ status, or receiving a valuation of $1 billion or more.
Moreover, the companyโs three-class stock structure that gives CEO Adam Neumann majority control over corporate policies is leaving investors lacking confidence in the companyโs sustainability. Neumann is known for his questionable practices, such as selling the โWeโ trademark back to the company for $5.9 million and leasing his own buildings to WeWork.
While the companyโs controversial business methods can be tweaked around, its financial losses are set in stone. In the first of 2019, the company has already experienced $904 million in losses.
