WeWork IPO Review

WeWork History

It has been a long journey of WeWork going public.  For the majority of companies it takes six to nine months to finish the IPO process. But not in the case of WeWork. It took  2 years and a failed attempt to finally bring their stock to the market in 2021.

But let’s go back to 2010, when the company opened its first open-space office in New York. Adam Neumann and Miguel McKelvey, founders of WeWork, believed in creating a space that would elevate how people work, live and grow. In 2010 there were just 2 locations and 450 members, but as of Q1 2021 WeWork provides flexible shared workspaces and office services for 527,000 freelancers, start-ups and businesses in over 528 locations in 111 cities across 29 countries. 

The company was doubling the number of members every year and by 2015, the firm had 51 coworking locations across the U.S., Europe, and Israel. Such a fastgrowing business attracted a lot of attention from big players like J.P. Morgan Chase & Co, Wellington Management, Goldman Sachs Group, the Harvard Corporation and in 2015 it was named among the "most innovative companies" by Fast Company magazine. 

WeWork then started a quick expansion to the East going to India, China and South East Asia. They bought expensive buildings in New York and heavily invested in property worldwide. If you are wondering whether it was profitable — no idea. Only news on spendings and the CEO’s huge salary.

In 2017 WeWork wanted to issue bonds to attract $500 million but it didn’t happen. However, that year the Japanese tech investment giant SoftBank got interested in WeWork and since then it has invested more than $18.5 billion. Remember that one particular investor, we will come back to this later.  

In 2018 the company continued to roll in the money and in January 2019 the company got a $47 billion valuation. 
At this point in time there was just one question in the heads of all investors: When is WeWork going public?

Look at the final WeWork IPO date and price two years later...

WeWork’s Public Listing Key Data and IPO Date

IPO Date: October 21, 2021
Ticker: WE
Exchange: NYSE
Share price: $10.38
Valuation at IPO: $9 billion
CEO: Sandeep Mathrani
Category: Real Estate Stocks
Method: via SPAC

As I have already mentioned, the company was valued at $47 billion in the beginning of 2019 and in April discreetly filed for WeWork stock IPO. Two months later WeWork’s CEO Adam Neumann liquidated $700 million of shares and quit three months later, before WeWork IPO. 

Hm? Feeling suspicious? Your gut feeling doesn’t let you down. In order to go public the company had to file the S-1 form disclosing financial data and huge losses, which made investors hesitant whether the company is able to prosper in the future. So it was postponed until December and… didn’t happen again. According to reports WeWork had a negative cash flow of $1.2 billion in Q3 2019. 

In 2020 the Board of Directors was looking to go public via SPAC (Special Purpose Acquisition Company) but the pandemic and lockdown hit the business hard. So again, not getting closer to the WeWork stock IPO date. 

Finally in March 2021, the company announced it had reached a deal to go public via merger with SPAC BowX Acquisition Corp. 

On October 21 the company became publicly traded with shares rising 13% by the end of the day to $11.38. So WeWork IPO valuation ended up being $9 billion, which is 5 times less than its initial valuation in 2019. Nonetheless, the management could finally say YES to the question ‘Is WeWork publicly traded?’

Happy ending after WeWork IPO?

Not for SoftBank, which reported a 99% profit loss in the fourth quarter in 2019 due to the failed IPO. And in the end faced the total valuation almost half the size it invested in it. 

So What About Investing Now?

WeWork is one of those unique cases where the company's future is truly ambiguous. On the one hand, the pandemic has presented the gift of a new way of working. Everyone appreciates how great it is to work from home, but not for long, so everyone strives for flexible working spaces. According to the recent CNBC report 76% of the polled workers said they want their company to make work permanently flexible in terms of schedule and/or location. 

On the other hand, filings show huge losses of the company:  $3.5 billion in 2019, $3.2 billion in 2020 and $2.1 billion in Q1 2021 (!) and sales around $3.2 billion in 2019, 2020. 

The projected revenue this year is also $3.2 billion. 

If you believe in the nearest future half of employees will be working remotely from different locations in neat office spaces like WeWork’s, then it’s a good fit for your portfolio at a rather low current price ($9.25 as of November 25). The company survived through two crises in a row and even went public. It sets high targets for the next year — to get $4.6 billion in revenue and about $7 billion by 2024.

If you prefer businesses that generate positive cash flow and work from coffee shops, then maybe you should look at Starbucks stock instead. 

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FAQ

Is WeWork a public company?

The company has been trying to go public for 2 years since 2019. It had a failed attempt to launch their  IPO on the NYSE due to conflicts with the CEO and filing unflattering financial statements. But after a year of reputation and business recovery it went public via special purpose acquisition company (SPAC). The WeWork IPO date was October 21, 2021. 

How much is WeWork worth?

In the beginning of 2019 it was valued at $47 billion. Two years later after WeWork SPAC IPO (it was the merger with BowX SPAC) the company was valued at $9 billion. As of November 25, the WeWork market cap is $7.3 billion.

Is ‘The We Company’ and ‘WeWork’ the same enterprise?

Yes. The original WeWork was renamed into The We Company in January 2019 to emphasize that the business is bigger than just workspaces. Legal rights to the new name were bought from Adam Neumann’s We Holdings. Later that year he returned the money for the trademark, but the company just kept the rights and came back to the WeWork name.