If that is not enough, it seems every day brings reports of the company's potential IPO falling further and further from its $ 47 billion private market valuation. Last week, The Wall Street Journal reported that The Company Company could dip below $ 20 billion. On Friday, CNBC reported that the valuation could fall below $ 15 billion. Not to be outdone, Reuters reported Friday it could be as low as $ 10 billion.
The colleague-supplier's apparent willingness to move forward with the public offer, even with such a steep discount from the previous valuation, suggests the money- Losing the business feels pressure to raise money now. We Company reportedly wants to use a $ 6 billion credit line that is conditional on raising at least $ 3 billion in a stock exchange listing completed by the end of the year.
A spokesman for WeWork declined to comment on this story, citing quiet period rules in front of a public offer.
WeWork effectively awards intense scrutiny and criticism less for being an anomaly in the tech industry than in many ways it is a poster child for the worst profits from other unicorns in technology ̵
1; the term used for private companies valued at $ 1 billion or more – disclosure this year.
Like Uber ( UBER ) The Company lost well over $ 1 billion the year before it was published. Like Lift ( LIFT ) Pinterest ( PINS ) and others, WeWork's parent company looked to give its founder oversized voting control business. And, like these and other companies, WeWork had a high price in the retail market that turned out to be a tougher sale on Wall Street.
Wall Street investors could have been "more tolerant" of the red flags if WeWork's listing did not come after a series of deficient public market debates this year, according to Kathleen Smith, rector of Renaissance Capital, which manages listed funds that are listed. Shares of Uber and Lyft both hover around the lowest times, well below the IPO prices, as investors worry about their path to being profitable.
WeWork also had other problems. The company confirmed in its listing prospectus that it had "entered into several transactions" with CEO Adam Neumann, "including leases with landlords where Adam has or has a significant ownership interest," which it said could "provide potential for interest rate disputes." Neumann's wife, Rebekah, also sits in the C-Suite and was originally authorized to form a committee to elect her husband's successor as CEO under certain conditions.
"Investors say: & # 39; You show me the way you set up the management that you don't care about. You haven't shown me that I can trust your business yet & # 39 ;," Smith said.
Last Friday, in the latest attempt to prevent the listing being encapsulated, the WeWork parent company announced that they had discontinued the plan for Rebekah Neumann to create a committee to elect the next CEO, instead of relying on the board. The company also said that the founders of including Neumann, would receive shares with 10 votes per share instead of 20, an improvement, but still potentially enable a disproportionate influence over the company.
Whether WeWork finally announces a valuation of $ 20 billion, $ 10 billion or not at all, the turbulent path to Wall Street – and the blur of changes announced in recent weeks – may prove to be a reality check for the broader startup industry. For years, Silicon Valley has enabled, if not fully encouraged, start-ups to seek stratospheric valuations, bleed conspicuous amounts of money, and impose little or no control over a founder's power. Now the public market signals that yes, there are actually limits to what they will give back.
"Maybe this is a wake-up call for others who want the opportunity for the public market to be an outlet for raising capital," Smith said. "Investors kind of care."