What happened to WeWork stock is a significant concern to several investors, considering that it was one of the most prominent real estate companies in the USA. Several people can’t comprehend a once-a-billion-dollar company swiftly collapsed from a $47 billion valuation and the endless scandals involving its co-founder, Adam Neumann, and his wife, Rebekah Paltrow. Read on to find out more.
About WeWork Stock
This company started operating in Brooklyn as a modest co-working space called Green Desk in 2008, before moving to Manhattan, New York, as WeWork in 2010. It was started by Miguel Mckelvey and Adam Neumann leasing workspaces, refurbishing them, and renting them out to entrepreneurs, tech firms, and startups. Afterwards, the corporation rebranded to “We Company” to enable its spin-off businesses, WeLive, WeGrow, and Rise by We.
It offers a ton of services, including communal spaces, mail pickup and delivery, technology, and fresh brewed coffee and fruits to its customers. While WeWork opened as a single space, the company has since stretched to over 528 locations in around 111 cities across 29 states.
The company had over half a million memberships in June 2019, with only half of them from the United States. Its IPO was one of the most anticipated events in 2019. However, not even experts could foretell that the event could implode.
What is IPO?
Private companies typically have a limited number of shareholders (mostly founders and investors only). As a result, the general public investor can’t easily acquire the shares unless you sweet-talk the owners into selling them to you. Even so, no rule compels them to grant your wishes, so you may not acquire the shares after all.
However, the company can decide to release its stock to get equity capital and become a public company. The first time the private company offers their stock for sale to the public is called Initial Public Offering (IPO). After the IPO, any public investor has a right to purchase shares of the business.
Why WeWork IPO Failed?
The failure of WeWorked IPO resulted from some factors. As experts at Money Morning put it, its business model was unrealistic and had little chance of success. Here are some other factors that could cause the IPO to fail.
- Lack of investor desire
The WeWork IPO paperwork stirred loads of negative emotions in the minds of many investors. According to the paperwork, the business recorded high growth in losses and seemed to burn large amounts of cash consistently. Similarly, their step of slashing the valuation up to almost halve indicated that they had overhyped the company’s exact worth.
- The Company CEO’s misconducts and Visible Conflicts of Interest
After Wall Street published an eye-brow-raising report detailing Neumann’s indulgence in alcohol and drug use, plus his wild partying ways, analysts questioned his capacity to pass lead and pass judgments across the company.
Similarly, it was evident that Neumann was squandering money from the company coffers. For instance, he charged the corporation a staggering $5.9 million for the “We” trademark and acquired loans from the company that he only reimbursed following prevalent criticism.
Lastly, the presence of Neumann’s wife in the trio that determines the company’s next CEO in case he could not lead anymore raised eyebrows.
Neumann resigned from his CEO post, and Softbank took over the business. WeWork’s success now needs extensive positive changes to record any significant growth.