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- WeWork revealed mushroom losses and staggering cash reserves on Wednesday in a third quarter earnings presentation reviewed by Business Insider.
- The coworking startup's net loss was offset by more than 150% to $ 1.25 billion, and available cash shrank by about 40% in three months to about $ 1.3 billion.
- The figures support SoftBank's decision to reduce WeWork's valuation by more than 80% last quarter to less than $ 5 billion.
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WeWork revealed mushroom losses and diminishing cash reserves on Wednesday in a third-quarter earnings presentation reviewed by Business Insider, supporting investor SoftBank's decision to reduce its valuation by more than 80% to less than $ 5 billion last quarter.
Revenues for the coworking start-up jumped 94% year-on-year to $ 934 million as it added a record 1
SoftBank Investment Advisors, which manages the Japanese conglomerate's vision of $ 100 billion Fund I, cut WeWork's valuation to $ 4.9 billion last quarter from nearly $ 30 billion. WeWork's soaring losses and cash burn were undoubtedly important factors in the decision.
WeWork "knew the bulk of this and kept the audience in the dark" about the increased quarterly losses, Vicki Bryan, CEO of research firm Bond Angle, told the New York Times.
The company accelerated spending this year ahead of the planned first offer, as it expected to raise at least $ 3 billion and unlock another $ 6 billion in bank funding. But investors questioned his questionable business model, heavy losses and limited governance as well as the controversial behavior of its founder and CEO Adam Neumann.
Faced with the prospect of going public on a fraction of the $ 47 billion private valuation it secured in January, and with a lack of funding requirements, WeWork scrapped the IPO, and Neumann stepped down. In the absence of cash, it reached a $ 9.5 billion rescue agreement with SoftBank that gave the investor control of the company.