Wework delays IPO plans amid investor caution
Wework has pushed back plans for its highly-anticipated initial public offering (IPO) amid cooling investor appetite.
Following a number of setbacks over its ambitions to go public, the fast-rising parent owner of real estate group Wework is expected to postpone its listing until the end of the year.
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We Company was set to begin tapping up investment for its float this week but it revealed this morning that it now expects to complete the listing by the end of 2019.
The move is likely to spark fresh speculation over the firm’s future strategy, coming just weeks after reports that the New-York based company was considering dramatically slashing the valuation it will seek when it sells shares on the stock market.
Sources told Reuters that We Company is looking at a valuation of just over $20bn (£16.12bn), less than half the $47bn price tag it received in private fundraising in January.
The possible lower valuation reflects nerves among potential investors that the office-sharing start-up could never turn a profit, despite having rapidly expanded to more than 425 locations in 100 cities in just 10 years.
The We Company lost more than $900m in the first half, it revealed in a filing last month, despite its revenue climbing to $1.54bn.
“The We Company is looking forward to our upcoming [initial public offering], which we expect to be completed by the end of the year. We want to thank all of our employees, members and partners for their ongoing commitment,” the company said in a statement.
Neil Wilson, chief market analyst at Markets.com, said: “WeWork is said to be delaying its planned IPO. Investors have given it the cold shoulder. It’s been something of a lemon so far with valuations drastically cut. Even with those reductions – from $47bn to $10bn – there’s not enough investor appetite. The $2bn they thought they could raise – half of which was likely to be coughed up by Softbank – falls short of the $3bn required to free up $6bn in bank funding.
He added: “It’s amazing how the cold light of an IPO can show up a business for all its stark neglect. To be fair, after Uber and the SmileDirectClub debacle the IPO market is not exactly simmering with interested buyers.”