Four reasons why, according to The Economist’s article Why WeWork doesn’t work yet - Daily chart, investors are unsure about WeWork’s parent company IPO:
- Lack of Profits.
- Recesion: $47B in lease payments but only $4b in committed future revenues from customers. How would the company face a recession?
- Corporate governance: WeWork will issue multiples classes of shares that give its founder, Adam Neumann, control with a minority stake.
- Company valuation: initially valued at $47 Billion, now the company is considering a more modest $15 Billion valuation.
Lack of profits is usually acceptable for tech companies that are burning cash in customer acquisition. But WeWork is not a tech company. Tech companies have, among other things, very low marginal costs for each new customer acquired.