WeWork begins a humbler second act 31 March 2021
IT IS HARD to imagine such shockingly different financial documents. Two years ago a startup in New York that boosters claimed was worth $47bn issued a flowery prospectus in advance of its initial public offering (IPO). The firm’s mission, it declared, was to “elevate the world’s consciousness”. Such was the backlash against its puffery that it was forced to scrap its flotation. On March 26th a New York firm unveiled a 50-page investor presentation that was rather less effusive, filled with talk of cost savings, efficiency and productivity gains for clients. This humbler company secured a backdoor listing, through a special-purpose acquisition company (SPAC), that would value it at around $9bn.
Both documents came from WeWork, a trailblazing but troubled pioneer of the co-working industry. After its abortive IPO in September 2019, its lofty valuation came down to earth (see chart). The future looked bleak. Adam Neumann, its flamboyant founder, was discredited and ousted shortly thereafter. It suffered a nasty falling-out with Japan’s Softbank, its deep-pocketed backer. Then came the pandemic-induced recession, which led some clients not to renew their contracts, many of which were short-term. That left the company with a huge global overhang of unviable property leases. At times, bankruptcy seemed like a real possibility.
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