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According to reports by Bloomberg and The Wall Street Journal, WeWork's noble valuation for its initial public offering was reduced to nearly half of the original $ 48 billion.
It is a relief to some analysts and investors observing the IPO that the initial target was contrary to reality, especially in view of some criticism of the complex structure of the company and its appearances of auto transactions.
"Given the risks and benefits inherent in this entire business model, I think $ 47 billion is a significant effort," said Santosh Rao, head of research at Manhattan Venture Partners, in an interview with Business Insider. The company initiated WeWork's coverage last month with a valuation of $ 28 billion.
"Maybe if WeWork was out before Lyft and Uber, they would have had a pass, but now, considering how much the appetite of businesses without a path to profitability has diminished, I do not think that 39, they will get the benefit of the doubt, "said Rao.
Uber and Lyft both stumbled after their public market debut earlier this year. Many investors in subsequent private towers are now in the red, with shares falling 24% and 43%, respectively, in the months that followed.
Other criticisms, such as the appearance of auto-transactions when a $ 5.9 million purchase of a trademark of CEO Adam Neumann was subsequently canceled, or a complex structure of corporate governance, further encouraged WeWork to fully justify its high valuation targets, Rao said. .
Read more: Adam Neumann, founder of WeWork, has made millions of dollars and intends to earn more thanks to his company of $ 47 billion about to become public.
"When you're a private company, maybe you can escape [with these things] because you have time to explain to investors what their long-term vision is and that people look beyond the little things in favor of a broader view of the company's situation and its future potential, "he said.
"But when you're an open society, you have to run and you have to perform," he added.
Then there is the question of recession.
Many companies are seen as rushing into public markets to raise capital before the eventual end of the long economic boom, and WeWork is no exception.
"They have to make sure the leases are solid," Rao said. "Forty per cent of the base is corporate clients, which sets a floor, depending on the duration of the slowdown.Mature markets are doing well, but they will have to venture beyond the larger cities. . "
WeWork is set to begin its presentation tour as leaders and bankers travel around the world to present their shares to investors as early as next week, Bloomberg reported on Tuesday. The offer could be second in importance this year, behind Uber.
More information about the WeWork IPO:
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