WeWork IPO valuation could be cut by half

WeWork IPO valuation could be cut by half
Written by:
Tsveta van Son
6th September 2019
Updated: 11th March 2020

Office space manager WeWork expects to be valued at about $20 billion in its upcoming initial public offering (IPO), the Financial Times reports. The amount is said to be less than half the $47 billion figure the company reached in its last round of funding from Japan’s SoftBank.

IPO valuation to be slashed

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Two sources briefed on WeWork’s IPO plans told the FT that the company was looking at a float valuation of about $20 billion. The report comes with prospective investors having raised doubts about the ability of the lossmaking shared office provider to become profitable anytime soon. Wall Street has also reportedly voiced concerns about several breaches of corporate governance norms.

Earlier this week, it emerged that the company, which is expected to kick off its IPO roadshow as soon as next week, had unwound a $5.9-million payment it made to an investment vehicle managed by its chief executive Adam Neumann for use of the trademarked word ‘we’. The group further added a woman – academic and former Uber (NYSE:UBER) executive Frances Frei – to its all-male board.

The lower valuation would be a big blow to SoftBank, which earlier this year invested money at $47 billion valuation.

‘Coming to terms with reality’

“WeWork is finally coming to terms with reality,” one person working with the company, told the FT. “It’s just not worth $50 billion or $60 billion, as they would like to be valued.”

The newspaper, however, also quoted a source as indicating that WeWork still hoped that the IPO valuation could finish in the range of between $25 billion to $30 billion.

News of the WeWork IPO valuation comes against the flops of Uber’s and Lyft’s (NASDAQ:LYFT) floats earlier this year. Slack (NYSE:WORK) has also recently seen hefty falls in its shares despite its markedly more upbeat market debut.

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