The We Company, the parent company of Wework, considers slashing it’s valuation to less than half of its $47 billion estimates, one of the largest valuation comedowns in IPO history, at $20 billion at an Initial Public Offering (IPO). The controversial real estate firm faced widespread criticism over its business model and corporate management. Earlier, SoftBank invested $5 billion in initial growth capital and an additional amount of $1 billion in the secondary funding.
WeWork built a kingdom of smart workspaces for freelancers, start-ups, and Fortune 500 companies alike. According to WeWork’s website, it is “committed to elevating the collective consciousness of the world by expanding happiness and unleashing every human’s superpowers.”
According to the Wall Street Journal, Adam Neumann, CEO of WeWork, recently had a meeting with SoftBank CEO Masayoshi Son to address SoftBank making an anchor investment in the IPO to support demand or making a further private investment in We Company in order to postpone the IPO.
Double Trouble for the Silicon Valley Unicorns
A striking drop in the valuation of We Company could also prove to be a crucial moment for the estimation of Silicon Valley unicorns. Some of the other high profile IPOs who have fared poorly in the investor skepticism over the lack of a concrete plan to profitability include Uber Technologies & Lyft Inc.
Earlier in May, Uber had completed its IPO valuation of $82.4 billion, lagging behind at the $120 billion marks predicted by the bankers. Given that Uber’s IPO valuation was higher than its most recent valuation of $76 billion in the private fundraising market, it fared far better than We Company.
According to reports, WeWork showed a revenue of $1.8 billion out of which it bore a massive $1.7 billion operating losses. WeWork has 528 locations that plan to open 169 new spaces. Half of its memberships are based outside the United States.