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The We Company files initial paperwork for an IPO
Adam Neumann says it's "part of keeping all options open"
The We Company, formerly known as WeWork, submitted a filing with the U.S. Securities and Exchange Commission that would allow it to go public, the company announced in a press release.
The announcement gives voice to rumblings in recent months that the flexible-office giant, now valued at $42 billion, was considering an initial public offering, as other unicorns enter the public markets with lukewarm reception.
Adam Neumann, the company’s CEO, told employees he had been celebrating his birthday last week when he decided to file the paperwork that would allow the company to become public, stating that it was “part of keeping all options open.”
In an internal memo, Neumann wrote that, “As one of the world’s largest physical networks, it is our responsibility to help lead the way and set the global example for people and corporations on how we should take care of each other and of our planet.”
The filing updates a previous draft s-1 confidential notice issued by the company to the SEC in December. Neumann said there is no timeline for an IPO, and told employees he is restricted from discussing the matter further.
Last month, ride-hailing service Lyft registered as a public company and is valued at $17.3 billion. Its chief rival Uber is also planning its own public offering with a valuation between $80 billion and $90 billion. Other startups, including Pinterest and PageDuty, have filed for public offerings. Office instant-messaging app Slack is also preparing for its own public offering.
But many analysts have also predicted that 2019 could bring to an end the booming economy of recent years. The Real Deal reported last week that WeWork made some prescient moves ahead of a purported downturn in the U.S. commercial leasing markets, which would serve as an existential test to WeWork’s business model.
The firm has said that in the event of a market decline, demand for its business would in fact increase, and that it has over $6 billion cash and cash commitments to fund its expansion over the next four to five years.
But some observers have pointed to the fact that the firm’s success lies somewhat in the hands of deep-pocketed investors, including Japanese conglomerate SoftBank Group, which has so far committed $10 billion to the company. In January, however, investors confidence in WeWork was shaken after SoftBank’s Vision Fund walked back a $16 billion commitment, and Masayoshi Son’s SoftBank Group ponied up $2 billion.
Like the other unicorns striving for the public markets, the We Company is yet to turn a profit. WeWork’s latest financials show that revenue in 2018 about doubled year-over-year to $1.82 billion. But during that same span, net losses more than doubled, to $1.93 billion, and the company’s marketing spend almost tripled – a sign of its urgency to grow its customer base as occupancy rates and average revenue per member take a hit.
An IPO would provide a clear window into investor confidence of the firm’s office-space-as-a-service business model. It would also introduce greater discipline imposed by institutional investors, a trait the company has been accused of lacking.