Published: Sun, August 18, 2019
Markets | By Otis Pena

WeWork posts $900m loss as it plots stock market listing

WeWork posts $900m loss as it plots stock market listing

WeWork filed to raise $1 billion in an initial public offering on Wednesday, though the ultimate offering amount is expected to be at least three times larger.

The company, which offers shared office space, did not give any detail on the size of the offering or the exchange where the would list its shares. Myles Udland and Brian Cheung discuss. To be fair, WeWork, the company the constructs stylish millennial aesthetics that are turned into workplaces, faces a lot of issues that companies deal with in terms of leasing office space. WeWork is growing at an astonishingly fast pace and losing money just as fast.

WeWork's future as a public company collided headlong this week with investors' biggest concern: What happens in a downturn?

Co-founder and CEO, Adam Neumann, once told reporters that his company's "energy and spirituality" were more important than its revenues.

The prospect of a WeWork IPO was met with skepticism after the official S-1 filing to the SEC revealed some extravagant facts and figures about the company and its CEO.

Neumann also owns a significant majority of the company's voting stock, including 100% of its Class C shares, on top of 2.3 million Class A shares and 112.5 million Class B shares. It's 24 times the amount that ride-sharing giant Uber, another recent IPO, is on track to lose per active rider this year, and almost 129 times what struggling meal delivery service Blue Apron losses per subscriber, and almost 753 times the $6.90 per year that popular pet e-tailer lose a year per regular customer.

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"Average revenue per WeWork membership has declined, and we expect it to continue to decline, as we expand internationally into lower-priced markets", the company said in the filing. WeWork, where SoftBank is one of the largest investors, disclosed a net loss of nearly $690 million and a revenue of $1.5 billion in the first six months of 2019.

Neumann has personally owned parts of office buildings WeWork leases. But the company has branched out widely, from acquiring a marketing software company to launching a business-focused school for children and buying a large stake in a wave pool company.

WeWork revealed its IPO prospectus on Wednesday and we found some weird facts and figures inside. Eight months later WeWork has released its paperwork to the public, and a WeWork IPO seems imminent.

WeWork established itself as a major player in the co-working space but it's far from the only one.

Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. But it can't be ignored that the company's profit base is razor-thin. It has been criticized for being largely backed by the SoftBank Vision Fund, which counts the Public Investment Fund of Saudi Arabia as a major source of capital. So are its growth, losses, potential conflicts of interest and financial gymnastics.

"At the time of our rating back in April 2018, we thought that the company would be able to attain normalized profitability within a couple-of-year horizon", analyst Kevin McNeil said. The same tone permeates the entirety of the document and serves to convey an office-leasing company as something more than it really is.

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