We all work together! This much anticipated Initial Public Offering is set to start its IPO roadshow this week. WeWork has lowered its valuation from $47 Billion and is now targeting a valuation of around $20 Billion.
Background
For those not in the know, WeWork was founded 9 years ago as “GreenDesk”, a co-working space in Manhattan, New York. Since then, WeWork has become one of the biggest corporate landlords in various cities around the world. 111 cities to be exact. They have over 520 000 members, which has doubled from the previous year. They have also attracted some notable investors such as Goldman Sachs and Softbank.
Fundamentals
The co-working space has made headlines lately, ahead of its IPO, as just another money-losing enterprise to test its luck on the stock market, much like Lyft and Uber. WeWork has made some significant gains in revenue, but unfortunately the company’s losses have also increased significantly.
WeWork’s 2018 revenues are reported at $1.8Billion with losses exceeded $1.6Billion, while the first half of 2019 looks much better. The first half revenues posted a Steller $1.54 Billion, with losses amounting to $689 million.
Besides renting out buildings and modernizing them to sublet to its members, WeWork has also acquired a marketing software company. Future ventures include: a business-focused school for children called WeGrow, Rise by We, a wellness program, and WeLive, its housing project.
WeWork co-founder Adam Neumann had something to say last week to all the pending IPO doomsayers: “If Wells Fargo, the largest lender in this country (USA), can get comfortable with this, then everybody should”. WeWork has a $6Billion credit facility with Wells Fargo.
Take away
WeWork is definitely one of the stocks to watch and very much anticipated all over the world, but will it stand the test of time and space? More information about WeWork’s IPO will be released as the Roadshows progresses this week, but let’s hear what our clients have to say, do you want to invest in WeWork?
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Barry is a market analyst with GT247.com, with a wealth of experience in the investment markets. Now in his tenth year in the markets, Barry "The Beef" Dumas brings a combination of technical analysis and fundamental insights to the table.