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If that were not enough, every day seems to report that the potential valuation of the company's IPOs is decreasing more and more compared to its valuation of the private market of 47 billion dollars. Last week, the Wall Street Journal announced that the stock market valuation of The We Company could go down to less than $ 20 billion. CNBC announced Friday that the valuation could fall to less than $ 15 billion. Not to be outdone, Reuters reported Friday that it could be as low as $ 10 billion.
The apparent willingness of the coworking space provider to go ahead with its public offering, even with a discount as important as its previous valuation, suggests that the company losing to Money feels the pressure to raise money now. We would like to tap into a $ 6 billion line of credit to raise at least $ 3 billion under an IPO completed by the end of the year.
A WeWork spokesman declined to comment on this story, citing quiet period rules before a bid.
WeWork effectively opposes scrutiny and criticism less to the fact that it is an anomaly in the technology sector than its multiple ways of being a spokesperson for the worst excesses of other unicorns technology – the term used for private companies worth at least $ 1 billion – – made public this year.
As Uber (UBER), We lost more than $ 1 billion in the year prior to its IPO. As Lyft (LYFT), Pinterest (PINS) and others, WeWork's parent company sought to give its founder oversized voting control over the company. And like these companies and others, WeWork had a high valuation in the private market which proved to be a tougher sale on Wall Street.
Wall Street investors may have been "more tolerant" of these red flags if WeWork's IPO did not come after a series of unsightly debuts on public markets this year, according to Kathleen Smith, director of Renaissance Capital, which handles trading on exchange-traded funds. The shares of Uber and Lyft are around their lowest levels, well below the price of their IPOs, investors fearing to be profitable.
WeWork also had other problems. The company confirmed in its IPO prospectus that it had "entered into several transactions" with its general manager, Adam Neumann, "including leases with proprietary entities in which Adam holds or held a significant participation ", which could" present risks of conflicts of interest ". the interest. "Neumann's wife, Rebekah, also sits on C-Suite and originally had the power to form a committee charged with choosing her husband's successor as CEO under certain conditions.
"Investors say," You show me by the way you have put in place a governance that you do not care about me. You have not shown me that I can still trust your business, "Smith said.
On Friday, in its last attempt to prevent its IPO from capsizing, WeWork's parent company announced that it had canceled the plan to have Rebekah Neumann set up a committee to select the next CEO, rather relying on the board of directors. The company also stated that its The founders, including Neumann, would receive high voting shares with 10 votes per share instead of 20, an improvement that nevertheless allows a disproportionate influence on the company.
Whether WeWork has finally made public with a valuation of $ 20 billion, $ 10 billion or not at all, its tumultuous path to Wall Street – and the plethora of changes announced in recent weeks – could prove to be a reality test for the broader startups sector. For years, Silicon Valley has allowed, and even encouraged, start-ups to search for stratospheric assessments, bleed mind-blowing amounts, and place little or no control over the power of the founder. Now, the public market indicates that in reality, there are limits to what it will repay.
"This may be a wake-up call for those who want the public market to be an outlet for capital raising," Smith said. "The kind of investor care."
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