WeWork’s parent company is ready to postpone its initial public offering (IPO).
The news follows reports that SoftBank — the company’s biggest investor — asked WeWork to shelve its plans to go public due to questions over how much the company is worth. In addition, WeWork’s parent company, We Company, has come under scrutiny from both investors and analysts over its governance, as well as payments made to Co-Founder and Chief Executive Adam Neumann and its use of a complicated corporate structure.
Now sources have told The Wall Street Journal that We Co. plans to postpone its roadshow until at least next month.
While We Co. had been valued at $47 billion in a fundraising exercise this year with SoftBank, sources revealed that in recent days, its executives and underwriters have lowered that valuation to between $15 billion and $20 billion or even lower.
In addition, the New York-based company lost more than $900 million in the first half of 2019, up 25 percent from a year earlier, even though its revenue doubled to $1.54 billion, as it burned through cash to expand.
Investors could also be worried after the recent debut of SmileDirectClub, a teeth-straightening startup that fell 28 percent on its first day of trading — making it the year’s worst stock-market debut for an American company valued at more than $1 billion.
We Co. is expected to wait until at least mid-October to start its investor roadshow. If the listing is shelved, the company would lose out on a $6 billion loan from a group of banks, including JPMorgan Chase and Goldman Sachs, that was contingent on the IPO raising at least $3 billion.
The company revealed earlier this year that it is also looking to expand into owning buildings, and is launching a “global real estate acquisition and management platform” to purchase stakes in buildings that it plans to lease. The fund will be called ARK and will start with $2.9 billion of total equity capital.