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WeWork may be worth only half the previous $ 47 billion valuation




The office rental company WeWork may end up being valued at less than half of what it is currently "worth" when it ends up completing its highly sought-after stock exchange listing. The startup has long been faced with annoying questions about whether it has been overstated.

According to a series of reports on Thursday, WeWork, which was most recently valued by venture capitalists at $ 47 billion, is currently selling shares at a price that values ​​itself at as low as $ 20 billion. This is not a nip and a tuck. There is a dramatic slash in value that speaks to a more fundamental concern about what this company itself is.

The reports also indicate that WeWork is considering postponing the IPO, which was one of the most anticipated in 2019. The company has been targeting a public IPO – it released its financial data last month and expected to start its "road show" or formal investor meetings next week – but are now weighing a delay on the stock exchange listing until 2020, according to the Wall Street Journal.

Companies always try to manage the expectations game around a stock exchange listing – that's when a young company graduates to a public stock exchange such as the Nasdaq or New York Stock Exchange. Sometimes it can make it difficult to see if there are legitimate concerns about how a company will perform, or if a company just sets the table for a positive story of how it "beats" expectations.

But all in all, the stories indicate that WeWork is in a hurry to roll back some of the company's trademark, worry-free euphoria.

WeWork, which signs long-term leases for buildings and then distributes them on short-term contracts to both start-ups and large companies, has always tried to position itself as a technical company rather than as a real estate company. That's because "technology companies" – whatever the term means – are typically valued at much higher amounts than companies with similar revenues that are just "real estate companies."

But the problem for WeWork is that many observers and investors make see it as a real estate company. Although the word “tech” was used 123 times in its IPO filing, WeWorks basic business model is no different from IWG, its biggest rival. IWG is generally regarded as a real estate company.

So it is possible that investors in the public market do not buy messages that they have been sold (well, at least not as much as venture capitalists did).

Another factor that is reportedly drying up investor demand: concern about how WeWork is managed. The company is closely controlled by founder Adam Neumann, who has skirted with conflicts of interest that blends his personal enrichment with the company's main line. WeWork's parent company originally paid Neumann $ 6 million for the trademark rights of the “We” brand, a case that in many ways crystallized management issues with the company.

But then on Wednesday – in another move apparently intended to disprove mounting criticism – the company said it would undo the deal. It also added its first female board member when the rejection was turned over to the company's general board.

For all the drama, WeWork, at least, seems to be finally listening to the critics.



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