WeWon’t: WeWork Pulls Out of Its Troubled IPO
WeWork plans to submit a request with the U.S. Securities and Exchange Commission to withdraw its S-1 filing, which the company filed on Aug. 14 with $1 billion listed as the targeted amount to raise from the IPO, WeWork announced today.
“We have decided to postpone our IPO to focus on our core business, the fundamentals of which remain strong,” WeWork’s newly appointed co-CEOS Artie Minson and Sebastian Gunningham said in a statement. “We are as committed as ever to serving our members, enterprise customers, landlord partners, employees and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.”
WeWork’s parent company, The We Company, filed plans last month for the IPO but almost immediately faced concerns from potential investors over the amount of cash it burns each year and conflicts of interest from former CEO Neumann.
Last week, Neumann stepped down as the head of the 9-year-old startup after pressure from investors after a Wall Street Journal profile of Neumann uncovered the 40-year-old stuffed a cereal box with weed and brought it on a private jet to Israel; his wife, Rebekah Neumann, fired multiple employees after a short meeting because “she didn’t like their energy”; and he handed pink slips to seven percent of WeWork’s staff then immediately passed out shots of tequila and treated remaining employees to a private concert by Run-DMC’s Darryl McDaniels.
The company was also reportedly in talks to cut its massive $47 billion valuation to as low as $10 billion before the IPO.
After Minson and Gunningham took over for Neumann, the execs planned a series of cost-saving measures for the cash-burning startup including laying off more than 12,000 employees and selling off businesses outside of its core operation, the WSJ reported. The company also plans to cut off all leasing activity — as opening up new offices are one of the biggest money pits for WeWork — but still finalized a giant, 362,197-square-foot deal at 437 Madison Avenue last week, as Commercial Observer reported.
WeWork’s IPO filing shows that while its revenues grew at a staggering rate in recent years, its losses have followed at a similar pace.
From 2016 to 2018, WeWork’s revenues increased from $436 million to $1.82 billion, but its net losses increased from $430 million to $1.6 billion in that same time, the filling show. In the first six months of this year, WeWork pulled in $1.5 billion in revenue but posted a net loss of $690 million.