On September 30, a week after its controversial founder Adam Neumann was ousted as CEO, WeWork’s high-yield bond price dropped to a record low.
In just over six weeks, the company has experienced a painful fall from grace. Once the US’ most highly valued tech start-up, with a valuation of $47bn, the company quickly became steeped in scandal after investors raised concerns about its corporate governance and long-term financial viability. Although WeWork’s revenue doubled to almost $1.8bn in 2018, its losses also doubled to over $1.9bn.
Despite what critics were saying, the company had remained hopeful that it would still be able to spur investor interest. But it was forced to admit defeat after its possible valuation dropped to $10bn and its main investor, SoftBank, began putting pressure on the company.
Nonetheless, WeWork’s newly appointed co-CEOs Artie Minson and Sebastian Gunningham claim the company will pursue another IPO later down the line. “We are as committed as ever to serving our members, enterprise customers, landlord partners, employees and shareholders. We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future,” they said in a statement.
WeWork quickly became steeped in scandal after investors raised concerns about its corporate governance and long-term financial viability
Withdrawing the IPO means WeWork will now need to look for alternative funding, since its $6bn loan deal with banks depended on a share sale of at least $3bn. It is currently in talks to renegotiate a $1.5bn injection from SoftBank. WeWork is also expected to cut back its workforce and rein in its expansion plans as it looks for new funding.
WeWork’s failed IPO comes during a difficult period for start-ups attempting to go public. Last week, entertainment and talent company Endeavour shelved its IPO, while shares in the fitness start-up Peloton fell by seven percent in their Wall Street debut.