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WeWork files confidentially for IPO

People meet in a WeWork space in Los Angeles in 2017.
(Kirk McKoy / Los Angeles Times)
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Bloomberg

WeWork Cos., the world’s biggest office-sharing company, is planning to go public, joining a wave of highly valued technology start-ups moving to the U.S. markets.

The New York company said Monday that it filed paperwork confidentially with the U.S. Securities and Exchange Commission to hold an initial public offering. WeWork — which rents office space to companies and freelancers, and also goes by the brand We Co. — would probably be the year’s biggest U.S. IPO after ride-hailing giant Uber Technologies Inc., which expects to start trading next week.

WeWork was most recently valued at $47 billion after a January investment from SoftBank Group Corp., its biggest investor.

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Similar to the crop of other big-name tech IPOs this year, such as Uber and Lyft Inc., WeWork runs a business with eye-watering losses. That’s partly the result of heavy real-world expenses, such as building lease commitments that can last 15 years. The company posted a loss of $1.93 billion on $1.82 billion in sales last year.

In an email to staff Monday, WeWork’s chief executive, Adam Neumann, painted the company’s responsibilities in the lofty terms expected of a firm whose mission is to “elevate the world’s consciousness.” The email’s subject line read: “Just Getting Started.”

“We have regularly focused on how to take our business to the next level in every aspect,” Neumann wrote in the email. “Partly due to technology and partly due to the times we live in, the world has never felt smaller and yet more people than ever are sharing that they feel alone. As one of the world’s largest physical networks, it is our responsibility to help lead the way and set the global example for people and corporations on how we should take care of each other and of our planet.”

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Since its founding in 2010, WeWork has raised more than $12 billion in funding, most of it from SoftBank. The Japanese conglomerate has reshaped the world of tech start-ups with its $100-billion fund backed by Saudi Arabia. SoftBank is a major investor in several of the biggest public offerings planned for this year, including Uber and workplace-messaging app maker Slack Technologies Inc.

WeWork said it initially filed plans to go public in December and recently issued updated documents. Around the time it first filed with regulators, it was in talks with SoftBank to sell a majority stake. As global markets faltered, SoftBank backed off the plan and agreed in January to invest $2 billion to increase its minority stake. SoftBank’s stock is up almost 50% since then.

Although WeWork’s IPO filing isn’t yet available to the public, the company has made select disclosures about its financial performance for the last year or so. The bond market got a first glance in April 2018, when WeWork was selling $702 million in bonds rated as junk.

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Since then, WeWork has briefed reporters periodically on certain financial information. It has shown a pattern of growing revenue and growing losses. The company coined its own earnings metric, called “community-adjusted Ebitda,” which eliminates all expenses related to its investments for expansion and into new markets. The company indicated the measure was an attempt to convey whether its existing buildings are profitable on their own, though it also invited derision from critics who say the operation is unsustainable.

WeWork keeps pushing. Now landlords and rivals are pushing back »

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