September 5, 2019
(Updated with additional information)
WeWork reportedly has downsized its valuation expectations ahead of its planned initial public offering. The New York City-based coworking giant is targeting a valuation between $20 billion and $30 billion, or about half the $47-billion valuation it achieved earlier this year from an investment by SoftBank Group, its biggest backer.
Citing anonymous sources, Bloomberg News reported that the valuation could end up closer to $20 billion. Potential terms for the IPO are still being discussed, and the eventual valuation could change depending on investor demand.
Founded in 2010 and currently the largest private-sector tenant in New York City, WeWork has yet to turn a profit. According to the company’s registration statement with the SEC, WeWork has lost $2.9 billion in the past three years, and $690 million in just the first six months of 2019. However, its annual revenue more than doubled to $1.8 billion in 2018.
In a CNBC interview Wednesday, Sam Zell said the WeWork model was nothing new. “I had the privilege of investing in this kind of company once before,” Zell told CNBC. “As a matter of fact, this kind of company began in 1956,” when office subletting emerged.
Referring to WeWork’s business model, Zell said, “They should have just changed the name of the company to ‘savings and loan.’ That’s really what you’re talking about, creating long-term liabilities and short-term assets. Every other time in history when they create that, results are predictable. Why is this any different?”
WeWork plans to launch its IPO roadshow as soon as next week, Bloomberg reported. The company reportedly is targeting a share sale of about $3.5 billion, for the year’s second-biggest IPO behind Uber Technologies Inc.
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