WeWork files for IPO, reveals financials: Is it a good investment?

By IPOsFOXBusiness

WeWork imposes 'no meat' policy for employees

FBN's Susan Li on WeWork's decision to no longer serve meat or reimburse employees for meals that include red meat, poultry and pork.

WeWork filed to raise $1 billion in an initial public offering on Wednesday, though the ultimate offering amount is expected to be at least three times larger.

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The office-sharing startup will list under ticker symbol “WE,” but has not yet disclosed the stock exchange on which it plans to list.

The filing is expected to go public as soon as September. WeWork, which rebranded as The We Company in January, was recently valued at $47 billion after SoftBank, the company’s biggest financier, invested an additional $2 billion in January. Its other major shareholders include Benchmark Capital and J.P. Morgan.

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The workshare company reported revenues of $1.54 billion and a net loss of more than $900 million for the first six months of 2019. The company also reported that it had 527,000 members as of June 30, an increase of more than 90% from the year before.

Investors were initially skeptical of the company after its co-founder and CEO Adam Neumann sold shares he owned in the company and took loans worth $700 million to invest in additional real estate and other startups. The liquidation of assets concerned investors anticipating the IPO. However, an anonymous source told the Wall Street Journal that Neumann's borrowing against his stake proves he is confident in the co-working giant's long-term success.

In the presentation of their financials, the company projected confident commitment to growth. As of June 30, 2019, their run-rate revenue was $3.3 billion, representing 86% year-over-year growth, and a committed revenue backlog of $4.0 billion, approximately eight times the committed revenue backlog as of December 31, 2017.

Like other aggressive startups in the category such as Uber, they revealed loss, but their growth continues to accelerate. The files notes that the average commitment nearly doubled to 15 months, aiming for long-term partnerships. They estimate they will also penetrate 280 target cities globally at approximately 0.2%.

Real estate and investment firm Coldwell Banker Richard Ellis reported that WeWork accounted for 71% of the flexible space leased in Q2 2019 alone.

WeWork's "space-as-service" model has given way to several other sectors beyond workspace, as real estate becomes unaffordable for businesses. They have added communal housing complexes to their roster with WeLive business, as well as early education schools called WeGrow.

The We Company declined to comment at this time.

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This story is developing and will be updated.

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