WeWork Weighs Slashing Valuation

WeWork’s parent company is exploring a dramatic reduction in its valuation as it aims to go public while facing widespread skepticism over its business model and corporate governance, according to people familiar with the company’s listing plans and its recent talks with major investors.

We Co. is considering putting a price tag on its initial public offering that would value the company somewhere in the $20 billion range, potentially at the low end. That is less than half of the $47 billion mark where it last raised private capital this year, making it one of the largest valuation comedowns in IPO history.

And investors, many of whom have already grown wary of prominent companies like Uber and Lyft that have racked up billions of dollars in losses and do not appear to be close to turning a profit, may become even more cautious. Other unprofitable start-ups are also planning to go public soon, including Peloton, the fitness company, and SmileDirectClub, which makes teeth aligners.

“For real estate insiders, it is unsurprising to see the pushback on valuation,” said John Arenas, chief executive of Serendipity Labs, a rival of WeWork. He contended that WeWork’s financial statements, made public for the first time in August as part of the company’s regulatory filings, show that the company does not have any significant advantages over its competitors.

We had been planning to debut in September, which was earlier than many investors anticipated. But the situation remains fluid, and We could still start its roadshow to pitch potential investors on the IPO as soon as Monday. The company hasn’t yet chosen an exchange on which to list its shares.

Some investors have questioned how We will hold up if the economy slows down, something many fear is likely in the coming year. Complicating matters, the stock market We would jump into has been volatile as investors contend with uncertainty over the U.S.-China trade war.

Todd “Bubba” Horwitz