WeWork Finally Makes Market Debut

Brian Hilyard
Finance Section Editor

A familiar name began trading on the public market recently. WeWork, the estranged commercial office space developer, began trading on October 21 and has jumped nearly 30%.

Adam Neumann, co-founder of WeWork
Ousted WeWork CEO Adam Neumann (Photo courtesy of The Financial Times)

WeWork has changed significantly since Adam Neumann was ousted as CEO two years ago. The company is under new leadership, has fewer employees, went public via a SPAC, and, like many others, struggled through a pandemic.

One thing has not changed, however, it loses eye-watering amounts of money. Back in 2019, the steep losses forced a major investor to inject emergency cash to keep it running. Today, reported losses in the first half of the year are three times larger than the same period in 2019.

However, investors are optimistic. Current guidance forecasts that the company will generate positive free cash flow in 2022, and the new CEO, Sandeep Mathrani, is an experienced real estate developer. To provide perspective, despite not having an active role at WeWork for years, Neumann’s name appears 197 times in a registration statement for the SPAC merger, and the company had to be bailed out by SoftBank.

While the flexible office space industry is poised for explosive growth as the world exits the pandemic, the damage has been done. Before the troubling details of internal strife were made public, private investors had given it a $47 billion valuation. As of October 22, it now stands at just over $10 billion. SoftBank has invested $17 billion to date, and breaking even would be considered a win now.

 

Contact Brian at hilyarbr@shu.edu

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