What's going on?
The company behind coworking office space giant WeWork delayed its long-awaited and hotly debated initial public offering (IPO) – but it’s StillWorking to make its stock market debut later this year (tweet this).
What does this mean?
Privately owned WeWork initially aimed to raise over $3 billion from public investors, having valued the company at $47 billion. But after InvestorsWorked over the company’s finances, they appeared to balk at WeWork’s near $2 billion of annual losses. And even a later reduction in the company’s valuation to below $20 billion didn’t seem to change their minds. Some worried the founder would have too much sway over the company’s decision-making – and that, having already cashed out some $700 million, he may NotWork hard enough.
Why should I care?
For markets: IPO markets – toppy, but not sloppy.
Forecasts for low stock market returns this year have perhaps led investors to look for profits in often-risky alternative investments and newly listed stocks. But WeWork’s shown that investors won’t buy just anything. They may have learned a lesson from SmileDirectClub’s disappointing debut last week – not to mention Lyft and Uber, whose shares are languishing at or below their IPO prices. Lucky for WeWork, there are some investors who believe in second chances: after failing to make its July AttemptWork, the world’s biggest beer brewer AB InBev is again trying to serve up shares of its Asian business in a Hong Kong IPO – and investors are set to gulp it down.
The bigger picture: Dominoes may fall.
WeWork has $2.5 billion in the bank, but its losses aren’t likely to shrink any time soon. An IPO would deepen the company’s pockets, else it’ll likely turn to its largest private investor, SoftBank, which has already agreed to open its coffers early next year. That’ll keep the free beer flowing, but WeWork could struggle if it delays listing for too much longer – vindicating those investors who ditched its bonds on Tuesday.