WeWork is making Uber’s IPO look prudent

WeWork parent The We Company is about to achieve the seemingly impossible by making Uber’s initial public offering look prudent. But unlike Uber, WeWork is almost a decade old, has never turned a profit and does not deign to suggest when it might do so. Losses are vast, obligations are gigantic… WeWork is growing fast. Member numbers have nearly doubled in the past year… But cutting deals on central locations and fancy refurbishments to offer a ‘premium experience’ does not come cheap. WeWork lost $905 million on revenue of $1.5 billion in the first six months of 2019… The company’s plan to raise over $3 billion in an initial public offering will top up the near $3 billion it has in cash… Now compare this to profitable, established London-listed rival IWG, which is forecast to report revenues of just over £2.7 billion ($3.25 billion) this year — more than WeWork. The reason IWG trades with a market capitalisation of less than $5 billion is because its growth is less impressive and it lacks WeWork’s backing from SoftBank. Given this, it is worth remembering that SoftBank balked at the idea of putting $16 billion into WeWork earlier this year — a decision that may have accelerated the company’s IPO. Stock market investors should be similarly circumspect.