Following a failed IPO more than two years ago, WeWork finally looks set to go public via a special purpose acquisition company (SPAC) today.
Oct. 21, 2021
WeWork (NYSE: WE) makes its very belated debut on the stock market today, trading under the ticker symbol “WE.” The American-based commercial real estate company offers flexible office leasing solutions for growing businesses worldwide. WeWork will merge with a special purpose acquisition company (SPAC) today in order to officially begin trading publicly on the New York Stock Exchange. This comes more than two years after an attempted initial public offering (IPO) failed spectacularly.
The WeWork story so far
Founded in 2010, WeWork spent the better part of a decade building its business operations to become one of the hottest companies in the United States. It was lauded by multiple financial media heavyweights and raised billions of dollars in private capital. Then, in 2019, the company filed confidentially for an IPO. With a valuation of $47 billion by SoftBank Group, the IPO seemed destined to be a rousing success.
However, the IPO filing revealed huge financial losses and an impending shortage of cash. This, coupled with the very serious questions surrounding the company’s founder and CEO, caused WeWork’s valuation to plummet. In the coming months, the CEO was forced to step down following allegations of illegal self-dealing, and the IPO was halted.
This tumultuous period, along with the shutting of office spaces during the COVID-19 pandemic, left WeWork with a valuation of just $2.9 billion in early 2020. Since then, the company has worked to change its business model and enhance its offerings to a post-pandemic world. “WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn. As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever,” said Sandeep Mathrani, new WeWork CEO.
Now, with the company valued at roughly $9 billion, the company finally makes its long-awaited entry into the public market.
When can I buy WeWork stock?
WeWork is going public today, October 21 under the ticker “WE.” The stock opened at an initial price of $11.28.
Time to take a closer look at the books. Preliminary total revenue for Q3 of 2021 totaled $658 million, a rise of 10% on Q2 revenue. Total occupancy of owned spaces also increased from 52% to 60% between the two quarters. The company also reported 154,000 desk sales in Q3, with 84,000 of these being new sales. WeWork also grew its new subscription-based product to a user base of 32,00 as it looks to explore new sources of revenue. However, this all comes off the back of losses of $3.2 billion in 2020 and $3.5 billion in 2019.
WeWork’s growth potential
In a world where working from home has become the new normal, it’s easy to see why investors might be wary of WeWork’s future potential. However, this shift in global workplace dynamics might actually suit the company. WeWork can offer a way for businesses to operate within a flexible office model without the need to own property.
WeWork has also done a good job of streamlining its operations and optimizing its property portfolio. In an attempt to move the company further towards profitability, location operating expenses were slashed and over 150 leases were exited. These moves should be seen as exciting to investors, however, a lot more will need to be done to overcome the current profit issues plaguing the company.
Despite plenty of positives, many questions still loom over WeWork as a valuable investment. The company is burning through cash at a slower, but still alarming rate. Links to the controversial former CEO Adam Neumann remain present also, as he continues to hold an 11% stake in the company. These issues are certainly cause for concern, and any potential investor would be wise to do their due diligence before buying shares in the company.
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