The banks that underwrote the IPO will have collected hefty fees. WeWork take out long-term leases on its properties and generally agree shorter-term contracts with its tenants. The ten-year old company is yet to be profitable and just last year it quadrupled its losses to $1.2 billion.WeWork, or the recently rebranded the We company, is another one of startups evaluated at billions of dollars through private funding rounds and due to exceptional growth rate, which made the company consider going public even back in 2018 when the startup IPOs were booming in the market, raising billions of dollars through initial public offerings.The last funding the company had was around two months ago, while the company managed to raised over 13 billion dollars in total through private investors over the course of the last several years. Switzerland-based IWG, like WeWork, provides flexible-office space, but unlike WeWork, is a publicly traded company and is valued at around $4.6 billion, about a tenth of what WeWork is valued at. Companies, on the other hand, want the flexibility of short-term leases that allow them to quickly grow, shrink, or move their office space in response to personnel needs. When the company decides to go ahead with the listing, an investment bank will use the appropriate valuation techniques to determine the price of the shares. The only losers will be the public investors that allow themselves to buy this overpriced and extremely dangerous stock.For comparison, IWG uses a discount rate of just 3.7%. New WeWork investors will get a class of common shares with only 1 vote per share, while the existing investors will get 20 votes per share. Previous reports stated that the company wanted to list to secure a financing package. WeWork’s underwriters – Goldman Sachs and JPMorgan Chase – are testing investors’ appetite for a valuation between $15 and $20 billion, which is substantially lower than $47 billion valuation, given by SoftBank earlier this year.Following the example of Snap, Facebook and Lyft, After the IPO WeWork will consolidate power in the hands of its founder and Chief Executive Officer Mr. Neumann. In this situation, short-term rents can decline to the point where they no longer cover the long-term rental expense.WeWork can’t blame its mounting losses on the costs of growth either. In January 2019, WeWork received a valuation of $47 billion. Amol Sarva has parlayed real estate’s flexible office revolution into a $1 billion company in a little over three years. The price per space depends on the location. WeWork's big plans (and big losses) have divided Wall Street. If property prices and market rents were to fall, its tenants could demand lower rents, thus creating a further mismatch between revenue and costs.WeWork’s mission statement includes 'redefining success as personal fulfilment, not just the bottom line'.
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