WeWork’s fall, explained. WeWork is a real estate company that offers cool shared office spaces. A year ago, the company was valued at $41 billion. Today, WeWork’s value plunged more than 80% to below $5 billion.
WeWork’s failed IPO. for dummies
WeWork wanted to go public. This means that WeWork’s shares can be bought and sold freely on the market. But it couldn’t. I explain you here what an IPO is and its process.
Why? WeWork’s fall for dummies
When companies go public, the market makes a greater scrutiny of them. And experts and investors said that with its prices it’s impossible for WeWork to make a profit. As a result, the value of the company fell and the IPO was cancelled.
Reminder. WeWork had losses of $1.61 billion in 2018.
What does the company’s co-founder and CEO say?
Adam Neumann: We are focused on growing, that is why we’re not profitable yet (i.e. by buying more buildings).
WeWork reached an agreement with its largest investor, Softbank (a Japanese telecommunications company). Softbank pledged to buy up to $3 billion in stock from existing employees and investors. This is a stake of almost 80% in the company.
The problem today.
SoftBank said it would end the offer, claiming last week that WeWork failed to meet five conditions the deal was premised on.
Coronavirus time. WeWork fall explained
WeWork’s in a tough spot. Its short-term lease system means tenants can walk away at the drop of a tequila shot. And as the coronavirus strikes the economy, thousands reportedly are, by withholding rent or ending leases.
What’s going on with WeWork? WeWork explained