WeWork’s failed IPO proves the market works, Goldman Sachs CEO

We’ve just ushered in a new decade, and the markets seem not to
have forgotten WeWork’s dramatic
IPO that never was. But one of the commentaries that caught the
attention of many was Goldman Sachs CEO David Solomon yesterday’s utterances, claiming
WeWork’s failed listing is, in fact, a sign that the markets are “working”.

The bank executive made the comment during the World Economic Forum
in Davos when he was asked about WeWork’s last year’s attempt at going public. Despite
having been one of the underwriters of the failed deal, Mr Solomon didn’t mince
his words and went ahead to say the failure proved the listing process works.

WeWork lost close to $80 million due to the failed listing, Mr Solomon
said.

According to Reuters, Goldman’s boss told those present during the forum
that the undertaking was “not as pretty as everybody would like it to be,”
while shunning any blame in the matter.

“Banks were not valuing [WeWork]. Banks give you a model. You say to the
company, ‘Well, if you can prove to us that the model actually does what it
does, then it’s possible that the company is worth this in the public markets,’”
Solomon added.

But sources indicate that banks might have contributed to some extent to
the woes of the troubled workspace renting company. In 2018, the New York Times
reported that JP Morgan had approached WeWork’s CEO Adam Neumann and told him
they could find investors that would value the firm at more than $60 billion.
Goldman Sachs reportedly suggested an even higher valuation of about $90
billion, while Morgan Stanley proposed a deal that would see the tech giant
secure a valuation of over $100 billion.

But as it is, the IPO was eventually called off, and Mr Neumann sent
packing for alleged abuse of office.

Softbank, WeWork’s most significant investor, took over the operations
of the company and has been on a revival path since last year. Reports indicate
that the bank has spent more than $18 billion with the hope of awakening the once
giant tech unicorn.

Whether WeWork will be making a comeback to a market that once shed billions of dollars off its valuation or not, remains to be seen.