After a protracted period of public scrutiny, WeWork has elected to withdraw its IPO as it regroups and revamps the business.
The extended bull-and-bear struggle surrounding WeWork has culminated in the start-up officially withdrawing its IPO.
Speculation has been rife for weeks that the real estate company, which provides working spaces used by many tech start-ups, would have to pull back on its breakneck growth. A spree of acquisitions and a valuation of a staggering $47bn – which many commentators decried as overly bloated – left investors sceptical. WeWork quickly halved that valuation, though that failed to quell rumours that the company would have to delay the much-anticipated IPO.
Existing doubts were bolstered by an excoriating Wall Street Journal profile of WeWork founder Adam Neumann, who has been criticised for erratic behaviour. The founder was also accused of lavish spending, including $60m on a private jet.
After delaying the IPO, Neumann, along with his wife and fellow co-founder Rebekah, began to distance themselves from the company. Neumann stepped down as CEO last week, saying that the scrutiny directed towards him had become a “significant distraction”.
Now, the newly appointed co-CEOs – Artie Minson, who was formerly co-president and CFO of the company, and Sebastian Gunningham, who was formerly vice-chair – will be allowed to tackle WeWork’s financial turnaround away from prying eyes.
However, the IPO withdrawal places further pressure on the firm, given that its $6bn loan was predicated on a public offering generating cash.
As of the end of June, according to The Wall Street Journal, the company had $2.5bn in cash and was burning through it at a rate of $700m a quarter, leaving some analysts to conclude that the company would be out of money by the end of 2020. Many are bracing themselves for a series of layoffs at the beleaguered start-up, which employed almost 10,000 people as of March 2019.
Minson has not ruled out the possibility of an IPO further down the line, and has committed to rehabilitating the company both in books and in looks.