WeWork’s IPO Reportedly Planned for September
True believers and detractors are watching the flexible office space provider, following its obtaining a loan facility that would bolster its initial public offering.
NEW YORK CITY—In April, WeWork announced that in December 2018 it had filed paperwork for an IPO of its common stock. The Wall Street Journal has reported that the flexible office space provider is planning to go public in September. The news outlet stated that WeWork is meeting with banks to negotiate an asset-backed loan and is expecting to raise $5 billion to $6 billion. The debt would reduce the amount the company would need to raise in its IPO.
The WSJ noted one reason for the launch that’s earlier than what many investors expected is the strong US stock market and “executives at WeWork are worried that the good times won’t last.”
WeWork declined to comment about its upcoming IPO to GlobeSt.com.
Questions continue to resurface, following last week’s news that WeWork co-founder and CEO Adam Neumann cashed out stock and took on debt together totaling $700 million. A July 2019 opinion piece by Jeffery A. Sonnenfeld published in Yale Insights by Yale’s School of Management titled “WeWork: What, We Worry?” was one of the voices criticizing Neumann’s move. He cited Noam Wasserman’s contrasting founders like Michael Dell of Dell Technologies, Bill Gates of Microsoft and Bernard Marcus of the Home Depot who retained pre-IPO ownership with the founder of Groupon who shed stock prior to a shakier IPO.
However, a source with knowledge of Neumann’s recent deal last week told GlobeSt.com that Neumann did not draw a salary, and his debt was also backed by company assets. Plus, the source said Neumann is still the largest single shareholder of the company.
Some investors have also expressed wariness over WeWork’s plans to launch its IPO while operating at a loss. The WSJ had noted last year its $1.8 billion in revenue was eclipsed by $1.9 billion in losses. But several big name companies have operated in the red for years prior to turning a profit. For example, Tesla Motors operated for a decade before its first profitable quarter according to a July 2014 Inc. article.
Finally, the Yale Insights opinion piece differentiated Elon Musk and Mark Zuckerberg from Neumann saying the former “have unique disruptive technologies.” Is a massive co-working company with offices around the world such a disruptor that it can do to office space leasing what Facebook has done to social networks or Apple to mobile devices? Several real estate leaders say WeWork and its competitors have forever changed the office rental landscape. But Sonnenfeld opined, “Strip away the barn-wood interiors, bean bags, and expresso bars, and Neumann’s empire looks a lot like … a lot of other real estate companies.”