WeWork, officially known as WeCompany, is a revolutionary firm that changed the perceptions of what shared-office working is all about. It filed to go public earlier this year, but when is WeWork’s IPO? Here’s everything you need to know about WeCompany going public.
When is WeWork's IPO?
WeWork has stated that it will look to go public in September 2019. The fact that WeCompany filed its initial S-1 on 14 August, implies this is a realistic aim for them.
It has seemed like the firm is keen to get its IPO over the line as soon as possible, despite CEO Adam Neumann claiming WeWork is in ‘no rush’ to go public as there’s ‘lots of cash in the bank and access to debt’ earlier on in the year.
Having confidentially filed for it back in April, September seems plausible for an IPO on the surface. WeCompany has already invited analysts in to evaluate the business, something that is typically done significantly further down the line. It’s been one of the more unorthodox approaches to an IPO, but it still seemed likely to go ahead in the next two months until recent events.
Major investor, SoftBank, has urged WeWork to reconsider its IPO, stating investors may not value it as they had when they injected $2 billion into the company - giving it a $47 billion valuation. In mid-September, WeWork officially announced that it was delaying its IPO. In a statement to Reuters, a spokesman for the company claimed that the IPO is expected to be 'completed by the end of the year.'
Adam Neumann believes WeWork is ready for an IPO.
Why has WeWork's IPO been delayed?
WeWork's IPO has been delayed because of a lack of investor interest in the WeCompany going public. It had intended to float with a total valuation of $47 billion, but more recent corrections as low as $15 billion are still being scrutinised and said to still be too much to interest investors.
Leading up to an IPO, no stone is left unturned and it seems that a fair few flaws have been found with WeWork's - many circulating around CEO Adam Neumann.
It came to light that he had charged the company a modest $5.9 million simply for usage of the 'We' trademark. He also netted a cool $700 million from the sale of a number of shares recently, something very atypical of CEOs whose firms are imminently going public. The power he had over the company was also cause for concern.
In response, WeCompany limited the voting power of Neumann's shares and also constricted his ability to monetise his company holdings in the years immediately after WeWork goes public. This seemed to have not worked, though, as WeWork was quickly becoming an investment option that many wanted to steer clear of - one analyst even predicting the firm might soon struggle to give its shares away.
What ticker symbol will WeWork be listed under?
WeWork will be listed under the ticker symbol 'WE.'
What is WeWork?
WeWork is a shared-workspace company that looks for people ‘to join as an individual and become part of a greater ‘we’.’ It was founded in 2010 and has its headquarters in New York City. As of 2018, it had a total of 562 offices spaces and over 460,000 members – where the company gets the majority of its revenue.
In less than a decade, WeWork has firmly established itself as a top competitor in the industry. However, what is more impressive is the innovative and revolutionary perception it has developed. Perhaps it’s down to the free beer, but WeWork seems like a place where a lot of professionals want to work.
Source: GoToVan/CC BY 2.0. WeWork co-working space in Vancouver.
- Year of launch: 2010
- Headquarters: New York, NY, US
- Founders: Adam Neumann, Miguel McKelvey
- Number of US cities WeWork operated in: 25
- Revenue (2018): $1.82bn
- Members: 466,000
Data correct as of September 2019.
How does WeWork work?
WeWork operates on a membership basis. Those interested in renting a workspace from them must first acquire a WeWork membership, which costs a certain amount of money each month. At present, there are three different types of desk spaces that can be bought; private office, dedicated desk and hot desk. Each come at different fees and obviously, location affects the price as well.
There are options to rent month-by-month or just for a day, but even renting for just one day requires a membership. As of August 2018, there were 268,000 WeWork members, but this figure is a lot closer to the 400,000 level now. A WeWork membership gets you access to all 777 worldwide locations in 124 cities.
Why is WeWork going public?
Similar to the two largest IPOs of the year so far, Uber and Lyft, WeWork is losing money, and a lot of it at that. In 2018 alone it lost £18 billion so a primary reason for going public is to try to turn this around.
Part of the reason for the company’s high expenditure is the fact that expansion is so costly for them. It really doesn’t get bigger than SoftBank in terms of financial capital, but it seems even its $2 billion investment is not enough for the growth intentions of Neumann. ‘A lot of cash’ is needed, and this will mean sourcing it by going public.
Another reason for WeWork going public, according to Neumann, is to give the public a chance to invest and join the business while there’s still significant growth to come – as opposed to WeWork experiencing the growth internally and then offering investment to the public at its peak.
What is WeWork valued at and what will its share price be?
WeWork had a valuation of $47 billion. This was thanks to the SoftBank Group investment, made via its ‘Vision (capital) Fund.’ It was the $2 billion SoftBank injected that valued the company at $47 billion, but that valuation has since been rectified after the Japanese firm itself cautioned its business partner. Talks of a valuation as low as $10 billion have been mentioned.
What WeWork’s share price will be when it goes public is unknown at this time. Analysts have warned WeWork though, to not fall into the same pitfalls as Uber and Lyft (the two other huge IPOs of 2019) and overprice the stock as it goes live, but it seems like that's exactly what it has done. However, given that the valuation came courtesy of SoftBank's initial investment, it's perhaps they who have misjudged the true value of the company.
Should I invest in WeWork?
There are a number of factors that you should be aware of before you invest or trade in WeWork. Firstly, WeWork is losing money. Despite popularity and revenue showing healthy growth, the firm is still pumping copious amounts of money in to fuel this growth. Most recently, WeWork has looked to sell debt worth up to $4 billion in an attempt to ease financial pressures ahead of a planned IPO. As it filed for its IPO, WeWork also reported a $900m loss in the first half of 2019 alone. So just know, if you are looking to back WeWork, it may be one for the future as opposed to a short-term profit-grab.
Secondly, the business model has been criticised and labelled as slightly risky. How it works is that WeWork buys real estate in the form of offices through long-term leases. It then divides these spaces up into smaller working areas, adds a little sparkle with beer and comfy chairs and sells it on again to companies or workers looking for short-term leases.
This in theory makes sense as all three parties come away happy. The landlord of the offices gets money from WeWork. WeWork makes a profit by charging more for the short-term rent, and those companies who need more-temporary working spaces have offices available on a month-by-month basis. However, the real estate market is notoriously volatile and susceptible to crippling crashes. Were prices to plummet at any stage, WeWork would have to lower prices to upkeep demand but would still be in the fixed, long-term contract paying the pre-crash rates.
Do your research and consider the risk involved before you invest or trade in WeWork when it does eventually go public.
How to trade WeWork
At ETX Capital, we offer professional spread betting and CFD trading on over 5,000 markets and WeWork will be one of them. Our multi-award-winning TraderPro platform offers a comprehensive trading experience with instant execution, customisable workspaces and an array of technical indicators. We also offer free risk management tools to help you to limit your losses.
To trade WeWork, simply:
- Sign up for a free ETX Capital TraderPro account
- Upload the required documents for us to verify your account
- When WeWork goes live onto the stock market, search ‘WeWork’ to find the market
- Open up a trade ticket, select how much you want to wager plus any stops or limits and open your WeWork position