The pitch was beguiling: WeWork could soon become a $65 billion company.
That’s what Goldman Sachs Group Inc. bankers were saying only earlier this year. Banks up and down Wall Street were salivating at the prospect of steering the hipster office-sharing company onto the stock market. Never mind that it was losing billions.
Now, with questions swirling around WeWork’s business prospects, the hype has run headlong into reality. By Thursday, Wall Street was putting a new value on WeWork: as low as $20 billion. Maybe. And that’s if the company even manages to go public in the months ahead.
Reports surfaced that the company was considering delaying the initial public offering as it assessed investor demand and explored seeking additional private funds. But as of late Friday the company was planning to move ahead and will schedule meetings with potential investors, known as a roadshow, as soon as next week, according to people familiar with the situation.
Still, the situation could easily change. Some people familiar with the deliberations have signaled a possible delay of months, if the IPO happens at all.
The company is also in talks with SoftBank Group Corp., its biggest investor, for more financing that could delay the IPO even further and force its valuation far lower than the $47 billion it was worth at the beginning of the year, one of the people said.
Co-founder Adam Neumann’s preference is for the company to go public, one of the people said. The startup has a big incentive to complete the listing. Its access to a $6 billion credit facility is contingent on it successfully raising $3 billion in a stock listing.
WeWork and Goldman Sachs declined to comment.
It’s a remarkable comedown for WeWork, the signature grandiose-dreaming, money-chewing startup of these financial times. Seemingly overnight, its initial public offering has gone from one of the most hotly anticipated IPOs in years to a referendum on the era of so-called unicorn startups.
The New York-based venture, yet to turn a profit in its nine-year existence, is said to be considering a market debut at a valuation of $20 billion to $30 billion, Bloomberg News reported earlier this week. That’s just a fraction of the $65 billion valuation that Goldman Sachs, one of its lead bankers on the deal, told people close to WeWork that it could rise to after the listing, one of the people said.