WeWork Cos. today published the prospectus for its upcoming initial public offering, revealing a fast-growing top line and mounting losses that will test investors’ enthusiasm for unprofitable tech-related firms.

The company rents out shared office space to companies in buildings that it manages. The co-working giant, which was valued at $47 billion after its most recent funding round, stated in today’s filing that it hopes to raise $1 billion through the IPO. That’s likely a placeholder given the multiple reports claiming WeWork is aiming to take in upwards of $3 billion.

WeWork’s stock market debut will be closely watched. Even before the release of its prospectus, some Wall Street insiders expressed skepticism about the rationale behind its lofty $47 billion valuation, which reflects an assumption that its business is more like tech companies. Although it makes a case that it’s revolutionizing work in much the same way Uber Technologies Inc. and Lyft Inc., for instance, aim to revolutionize transportation, the business is essentially a real-estate play.

WeWork was already drawing fire when it was worth $20 billion. Another source of controversy is the company’s history of losses. Wall Street hasn’t been particularly kind to unprofitable tech companies recently: Uber and Lyft, which both went public earlier this year, are currently trading well below their IPO opening prices.

Insiders previously leaked that the company plans to take out up to $6 billion in debt on top of what it will raise via the listing, which today’s prospectus confirmed. WeWork requires massive amounts of capital to support its long-term monetization strategy. The company buys up commercial properties at a significant upfront cost in the hopes of recouping the investment over time through leasing.

WeWork is having no trouble finding tenants. The company closed the first half of 2019 with $1.5 billion in sales, up from $763 million the same time last year, and posted a $4 billion revenue backlog on top of that. 

Worldwide, WeWork now operates 528 co-working locations with 527,000 members as of the end of June. That’s nearly double the 268,000 professionals who were working out of the company’s buildings 12 months prior.

That growth has been expensive for WeWork. To achieve $1.5 billion in sales during the first half of 2019, the company incurred a $904 million net loss, roughly 25% more than what it had burned through during the same period a year earlier. Its losses are the result of not only continued real-estate acquisitions but also its efforts to expand into new markets such as education.

WeWork plans to list under the ticker symbol “WE.” The IPO prospectus didn’t specify the stock exchange on which the company will trade, nor when the public offering is set to take place. Recent reports have suggested that WeWork will stage its public trading debut as soon as September. 

Photo: Pixabay