WeWork, the shared office space giant, was able to get the support of some of the world's best investors, but it received a much colder reception as it tried to put its shares on Wall Street.
Faced with deep skepticism about their business model and corporate governance, the company has now suggested that it may not try to go public for another few months, and a person involved in the offer says it may be abolished hero.
This week, the company had been expected to launch a roadshow for the stock offering – where it put potential investors on the deal – two people said. This would have put it on track to start trading on the Nasdaq stock market by the end of next week.
In a statement released late Monday night, WeWork's parents, We Company, said it expected the offer to be completed by the end of the year.
But a delay – whether for weeks or months – may not reduce the concerns of investors who had questioned the valuation of the company. WeWork had been valued at $ 47 billion in January, when SoftBank of Japan made a major investment. But the prospect of going public has focused attention on a business that is profoundly unprofitable and likely to remain so for years.
WeWork has tried to save its public offering in a number of ways. On Friday, the company said it would reduce the power of its co-founder and CEO, Adam Neumann, amid criticism of the company's business management.
WeWork is the last of the so-called unicorns – businesses financed by venture capital firms valued at $ 1 billion or more – to falter. Shares in Uber and Lyft, two other unicorns, fell significantly following their public offering this year.
WeWork, the largest private tenant in Manhattan, rents out large volumes of office space and transforms it into slender work areas. Although the company has grown rapidly, it remains deeply unprofitable. In the first half of the year, the company recorded an operating loss of $ 1.37 billion and spent $ 1.5 billion in cash.
Analysts and investors have also said that WeWork has not provided details on profits and investments that will give them greater insight into how its properties are performing.
If the initial offer is significantly delayed, WeWork will have to find other ways to raise money.
Without a supply of new money, We Company may have to slow down the expansion, which spends hundreds of millions of dollars in cash. In the first half of this year, the company spent $ 1.5 billion in cash to run the business and expand its operations. It had nearly $ 2.5 billion in cash at the end of June.
It had expected to raise $ 6 billion from bank financing related to stock sales – but that money would only be available if the company raised at least $ 3 billion from the IPO
This funding has not yet been renegotiated, said one of the the people who briefed on the matter, though WeWork may eventually strike a new deal with the banks.
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