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.