WeWork officially pauses IPO post-CEO Neumann’s exit

Share This Post

WeWork has officially withdrawn the prospectus for its initial public offering, concluding a stained fundraising effort that cost the top executive and founder his job. The firm requires new sources of capital to keep running. 

Sebastian Gunningham and Artie Minson
Sebastian Gunningham and Artie Minson

Sebastian Gunningham and Artie Minson, the new co-CEOs of WeWork’s parent We Co. in a note to staff, said, “This puts an official pause on our process of becoming a public company.” Furthermore, they assured that Wework would become a public company once they figure out how to do the IPO right as it can only be done once.

Bonds in the New York-based company dropped to a record low Monday after the firm said that it was pulling out the IPO. According to reports, the bonds yield over 11.6% at the current levels.

The withdrawal ends a rough process that turned one of the most anticipated initial public offerings into an admonitory tale of the public market’s hesitation to pay up for a business model that is not proven. Adam Neumann stepped down as a CEO last week after concerns were raised about the firm’s corporate governance and its aggressive money spending. WeWork had sought to be valued a tech firm but was seen as an overpriced real-estate stock by many of its public investors. 

WeWork leases and owns spaces on office buildings and then rents rooms and desks to its clients. The company has raised over $12 billion since its launch nine years ago and has never turned a profit. 

 

WeWork-balancing expansion with a focus on profitability

The IPO plans filed by the firm in August were met with bashful replies from some. Triton Research Inc. Chief Executive Officer Rett Wallace said, “The prospectus is a masterpiece of obfuscation. If the underlying facts were positive, why would a company go to so much trouble to prevent you from understanding them?”

The CEOs said in a note that while it might feel disappointing, the leadership team and the board has decided to take a step back to see where they stand as a company. He added that the company has been incredibly resilient during the difficult phase and is now focussed on improving their core business- “balancing expansion with a focus on profitability.”

Bloomberg reported that WeWork would likely postpone the IPO until next year. The IPO was expected to be the second-largest public offering in the US this year and also gives a threat to $6 billion in credit financing that was feasible on a successful offering. 

The firm has been in talks with investment financial institutions and banks about a new $3 billion loan, which would likely be possible on raising a substantial amount of new equity. SoftBank Group Corp., the largest investor in WeWork, will probably be a source of the equity infusion. 

+ posts

A passionate writer with bachelor’s in the field of English & Journalism. Other than being a bibliophile, some of her hobbies are travelling, photography and poetry.

spot_img

Related Posts

Swiggy allows Work From home

Joining the list of startups Mesho, Spinny, Zerodha, and...

Can A.I. cure Cancer? 

When we hear the word "terminal disease," the one...

Metaverse in Medicine

Since its inception, Metaverse has been such a buzzword. From...

Monkey Pox – Another endemic?

The world was having a sigh of relief after...

KGF verse – All you need to know!

After a resounding success of KGF, chapter 1, the...

Quik.com Creating the Future Internet With NFT Domains

Web 3.0, also called the decentralized web, is expanding...