WeWork on go-slow as IPO delayed

Th delay of its planned initial public offering (IPO) is a setback for office rental company WeWork.

WeWork CEO CEO Adam Neumann © Getty Images

1079946878

WeWork has suffered an "embarrassing setback", say Eric Platt and James Fontanella-Khan in the Financial Times. The shared office space provider is delaying its planned initial public offering (IPO). A "chilly response" from institutional investors and calls by its biggest backer, Japanese conglomerate SoftBank, to postpone the IPO have prompted it to wait a few months. While it still plans to list by the end of this year, or in early 2020, the failure to immediately list on the stockmarket means that it won't be able to access a $6bn loan that was contingent on a successful listing.

WeWork's decision isn't surprising, says Tom Knowles in The Times. It is facing "increasing scrutiny from investors over its management practices and its ability to make a profit". Its pre-tax loss of $1.9bn in 2018, combined with a loss of $900m in the first half of 2019, meant that its expected valuation had been slashed from early estimates of up to $65bn to less than $15bn. At the same time, reports that CEO Adam Neumann (pictured) had "cashed out more than $700m from his company" in advance of the listing was another red flag.

The delayed IPO is also bad news for SoftBank and its Vision Fund, says Bloomberg's Tim Culpan. It was depending "on this one exit to keep the Japanese company's hit machine ticking along" after both Uber and Slack fell in value. Still, it can turn the year around if it is willing to "get the bad news behind it" and "hurry along the IPOs of the other unicorns in its stable". These include the "hugely popular" Chinese video content platform ByteDance, the "world's most valuable startup" at $75bn and Chinese ride-hailing app Didi Chuxing, worth $56 bn.

Recommended

Joe Biden’s spending spree will lift American spirits and markets – but it comes with a sting in the tail
US stockmarkets

Joe Biden’s spending spree will lift American spirits and markets – but it comes with a sting in the tail

New US president Joe Biden is planning to throw trillions of dollars in stimulus at his country’s economy. Markets will love that. But it comes with a…
25 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Three clean energy stocks for your portfolio
Share tips

Three clean energy stocks for your portfolio

Professional investor Christian Roessing of the Pictet Clean Energy Fund highlights of his three favourite stocks at the forefront of the clean energy…
25 Jan 2021
The MoneyWeek Podcast: let's talk about bubbles
Stockmarkets

The MoneyWeek Podcast: let's talk about bubbles

Merryn and John talk about the many obvious signs of a bubble in certain assets, including tech stocks, TikTok, and stock-trading 12-year olds. It's c…
22 Jan 2021

Most Popular

The FTSE 100 is set for a makeover with an influx of new tech stocks
UK stockmarkets

The FTSE 100 is set for a makeover with an influx of new tech stocks

The FTSE 100 – the dullest index in the world – is about to reinvent itself as a host of new firms list on the market. The change is long overdue, say…
24 Jan 2021
Think Tesla is a bubble? This might be the best way to bet on it bursting
Oil

Think Tesla is a bubble? This might be the best way to bet on it bursting

The huge rise in Tesla’s share price means that, by market value, it’s now the sixth-largest company in the US and and the world’s biggest car-maker. …
25 Jan 2021
Why we won’t see a house-price crash in 2021
House prices

Why we won’t see a house-price crash in 2021

Lockdown sent house prices berserk as cooped up home-workers fled for bigger properties in the country. And while they won’t rise quite as much this y…
18 Jan 2021