WeWork’s Value Could Sink to Below $8B
Coworking giant WeWork’s sinking valuation could take another hit as major investor SoftBank Group is reportedly planning a rescue package for the money-losing company that could put its value at less than $8 billion.
Tokyo-based SoftBank has been in talks to pump $5 billion of debt and equity funding into WeWork in order to save the coworking company before its cash reserves dry up as early as next month, which would cut WeWork’s valuation from the $47 billion it commanded in January, Bloomberg reported.
SoftBank already invested $10.4 billion into WeWork through its Vision Fund and the latest funding would come directly from the bank, Bloomberg reported. The deal would dilute other equity holders’ stakes in WeWork, including co-founder and former CEO Adam Neumann‘s, but not give it the majority of voting rights, the Financial Times reported.
Both JP Morgan Chase and SoftBank have been mulling competing plans to pump money into WeWork, according to Bloomberg.
A spokeswoman for WeWork declined to comment and representatives from SoftBank did not immediately respond to a request for comment.
It’s been a tumultuous couple of months for the 9-year-old WeWork after its parent company, The We Company, filed plans for an initial public offering in August that threw the doors open on its financials.
The IPO filing showed that while WeWork’s revenues grew at a staggering rate in recent years, so have its losses. From 2016 to 2018, WeWork’s revenues increased from $438 million to $1.82 billion, but its net losses increased from $430 million to $1.6 billion during that same time.
This year hasn’t looked much better for the company. In the first six months of this year, WeWork pulled in $1.5 billion in revenue but posted a net loss of $690 million, according to the filings.
Aside from its cash burn, WeWork also faced scrutiny from potential investors over conflicts of interest and questionable behavior of its former CEO Neumann.
Neumann stepped down last month after pressure from investors after a Wall Street Journal story about him uncovered he stuffed a cereal box with marijuana and snuck it on a private jet to Israel; handed pink slips to seven percent of WeWork then immediately passed out shots of tequila and treated remaining employees to a private concert by Run DMC’s Darryl McDaniels; and his wife, Rebekah Neumann, fired multiple employees after a short meeting because she “didn’t like their energy.”
WeWork executives Artie Minson and Sebastian Gunningham took over as co-CEOs after Neumann’s ouster and announced plans to pump the brakes on the IPO less than a week later.