WeWork made another attempt at the New York Stock exchange on Oct 21st, after two years of its original IPO. The IPO in 2019 failed miserably with reported scandal reports of financial misreporting and management around the then CEO and Founder- Adam Neumann.
WeWork has merged with BowX Acquisition Corp- a SPAC (Special Purpose Acquisition Company) instead of going with an IPO again. Due to excessive regulations, companies such as BowX are established only to provide an alternate route to companies to enter the stock market. The process starts with SPAC bringing the IPO and then merging with the actual company- WeWork in this case. The merged company will be listed on the exchange with WeWork’s assets and WeWork’s name.
When SoftBank invested in WeWork in January 2019, the company was valued at $47 billion. In just a year, the company was left to less than one-third of the value when SoftBank CEO’s son openly announced the depleting status of WeWork. Also, there were ongoing allegations of insider trading and self-dealing in the company. The current merger with BowX was valued at $9 billion in March 2021. The issuing price of WeWork shares was US$10, which jumped to US$11 when trading started.
The company has been seeing tough times since 2019, even before the pandemic started. It reportedly shrunk its employee base in Q1, 2019. With the pandemic in full blow, when people moved to remote working, commercial office rental businesses were among the firsts to face the ire.
According to Financial Times Report, WeWork lost US$3.2 billion last year and US$2.1 billion in Q1, 2021. In the next quarter, the loss dropped to US$ 923 million with rigorous efforts by the company’s think tank to control its operating expenses. WeWork’s CEO- Sandeep Mathrani, has been quite optimistic about the company’s prospects. He reportedly referred to WeWork, saying it is “the right company at the right time” and that the workspace on-demand model will soon catch momentum to give corporate employees the flexibility they always wanted.