Whatever the hell WeWork is—tech company or just a cult-like real estate venture that happens to offer kombucha on tap and desperately wants to be viewed as a tech company—it may not be going public anytime soon.
WeWork’s parent company, We Company, is “expected to postpone its initial public offering” amid concerns from investors over how much the company is actually worth and lingering questions about its corporate governance, the Wall Street Journal reported on Monday. While the coworking space firm had expected to go through with the IPO this month, the Journal reported that its investor roadshow will now commence “mid-October at the earliest,” with some investors like SoftBank urging WeWork to wait until 2020.
WeWork has been struggling to justify its hilariously overstuffed $47 billion evaluation, which relied in large part on its claim to be a tech company despite the fact that it mostly flips long-term leases to short-term tenants, has $47.2 billion in outstanding obligations it may not be able to pay back if a recession strikes, and reportedly used the wi-fi password “P@ssw0rd” at most of its locations. In the past few years WeWork has lost over $3 billion, and according to the Journal, executives and underwriters have become “resigned” to a valuation of “something closer to between $15 billion and $20 billion or possibly lower.”
According to Reuters, the decision to delay the IPO also indicates that investors are not satisfied with recent efforts to mollify critics of CEO and co-founder Adam Neumann, who has been facing scrutiny over little details like charging his own company $5.9 million for use of the “We” trademark and cashing out over $700 million in shares. Changes meant to rein Neumann in on Sept. 13 have apparently not secured the intended effect:
We Company had said it was making the changes “in response to market feedback”. It said Neumann’s superior voting shares will decrease to 10 votes per share from 20, though he will retain majority control of the company.
Neumann will also give the company any profit he receives from real estate deals he has entered in to with We Company. He will also limit his ability to sell shares in the second and third years after the IPO to no more than 10% of his stock.
(Neumann, it should be noted, reportedly once suggested that his company should have the highest valuation possible so he can help solve the refugee crisis.)
According to Reuters, last week We Company was rumored to have been considering an IPO valuation of $10-12 billion, less than the $12.8 billion in equity it has raised since 2010 and paltry enough to serve as a kick in the groin to the venture capital industry. We Company is bound by a commitment to a $6 billion line of credit it secured from banks in August that requires it to go public and raise at least $3 billion by the end of the year. Reuters wrote that even factoring in an offer from SoftBank to buy shares worth between $750 million and $1 billion, We Company concluded it would only raise a bit over $2 billion. That could possibly leave the company in need of alternative funding, which is a little like a listing ship frantically putting up Craigslist ads for lifeboats.
“The We Company is looking forward to our upcoming IPO, which we expect to be completed by the end of the year,” a We Company spokesperson told Reuters in a statement. “We want to thank all of our employees, members and partners for their ongoing commitment.”
Sounds like everything’s going great over there.