WeWork is heading to the public markets at the same time as the high-profile IPOs of Uber and Lyft had appeared to disappoint. Lyft is down double digits since its debut in late March and Uber ended its first trading session down more than 7 percent. The IPO of the office space startup that is trying to change the way office space is rented and leased is being closely followed given the response so far to highly-valued IPOs. Supporters of WeWork see the company as a disruptor in the industry, while skeptics view it as yet another overvalued, unprofitable startup that can only do well in a strong economy. According to Reuters, WeWork — through its parent, The We Company — filed preliminary IPO paperwork last week. If it decides to go public by the end of the year, it would likely hold the title of the second biggest of 2019. Uber holds the top spot with its $8.2 billion IPO.
The fact that WeWork isn’t tied to a lot of properties is what’s driving its lofty valuation, noted the report, citing Zach Aarons, co-founder of venture capital firm MetaProp. “Everybody wants to get the same multiple that WeWork has,” Aarons said. “Every traditional landlord is saying: ‘How do I get the Street to view me more like WeWork?’”
Still, critics told Reuters that the company has had continuous losses and faces the risk of having to rely on revenue from short-term contracts to cover the leases on the properties it owns. Those have leases that Reuters reported could last ten or more years.