WeWork announced that it would postpone an initial public offering that had been expected to raise $3bn-4bn
WITH ITS stylish shared workspaces and chic occupants, lubricated by fruit-infused water and nitro coffee on tap, WeWork, a firm that rents out temporary offices, had seemed to be riding the wave of a new trend in managing desk-jockey life. But the nine-year-old private company has suffered a setback, announcing on September 16th that it would postpone an initial public offering that had been expected to raise $3bn-4bn. Investors, it seems, cannot decide what the firm is worth.
They have four main worries. The first, and most glaring, is WeWork’s lack of profits. The firm argues that this is explained by the huge investments needed to secure economies of scale. It says that mature locations are profitable—revenues doubled during the first half of 2019 over the same period in 2018, to $1.5bn. But its net losses also rose, if more modestly, to $905m. A second concern is how the company would fare in a recession.
Mr Neumann’s claim that his firm will “elevate the world’s consciousness” is plainly silly. Even so, it is not fair to equate WeWork with the more conventional Regus. CBRE, a property-management firm, estimates that the flexible-work niche experienced “meteoric growth” of 25% in America’s top ten markets in 2018, with similar figures in big cities worldwide. WeWork’s innovations in work-place facilities have dramatically enlarged the size of the market for temporary offices.
They will also be all too well aware that the shares ofsome stars of the new economy have disappointed of late.Uber, a ride-hailing firm, listed its shares at $45 in May on the New York Stock Exchange. Today they were trading at about $34.50. In March its rival, Lyft, had sold its shares on the Nasdaq exchange at $72; today they are worth about $48. Slack, a corporate-messaging service whose shares started trading on the NYSE in June at an opening price of $38.
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