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WeWork delays IPO after valuation cut, criticism over CEO’s control
The We Co., parent company of co-working industry poster child WeWork, is said to have hit pause on its preparations for an initial public offering.
The Wall Street Journal reported today that WeWork will push back the IPO by at least a month. A source separately told CNBC that the offering could take place as soon as October, but added executives haven’t yet decided on a timeline for when to go public.
WeWork appeared tacitly to confirm the delay in a brief statement. “The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year,” the statement read.
Reuters, the third outlet that reported about the delay, said WeWork shelved the listing on Monday just before it was about to launch its investor roadshow. SoftBank Group Corp. is said to have played a role in the move. The Japanese carrier, which has bet nearly $13 billion into WeWork, reportedly urged the company to hit the brakes in response to investor skepticism around its stock market plans.
The main cause of concern is WeWork’s path to profitability. The company has lost billions of dollars to date and is straddled with massive liabilities thanks to the nature of its co-working business, which requires making large upfront investments in real estate that take years to recoup.
Leaks have suggested that WeWork will cut its target market capitalization for the IPO from $47 billion, its most recent private valuation, to as little as $10 billion. The company was last week also forced to change its corporate governance structure. To address investor concerns about Chief Executive Officer Adam Neumann having outsized control, WeWork reduced his voting power and pledged to appoint a lead independent director to the board by year’s end.
The clock is now ticking for the company to get its IPO back on track. If WeWork doesn’t list on a stock exchange by the end of the year and raise at least $3 billion, it will lose the ability to exercise a $6 billion conditional line of credit that it has negotiated with banks. The reported steep cut to the company’s valuation could make the $3 billion fundraising target that much harder to reach.
Photo: WeWork
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