WeWork plans IPO (again) as big tech eyes return to the office

WeWork may never have been profitable nor ever hit 75 percent occupancy, but the global coworking giant is again planning to go public.

After merging with SPAC BowX, WeWork is valued at $9 billion — down from its 2019 valuation of $47 billion. Though diminished, WeWork's 2021 debut may have apt timing.

What’s going on: Following Adam Neumann’s scandal-ridden tenure as chairman, WeWork is under new, belt-tightening leadership. WeWork CEO Sandeep Mathrani, the former CEO of Brookfield Property Partners, slashed headcount by two-thirds, cut administrative expenses by $1.1 billion, and reduced operating expenses by $400 million.

The reopening bet: WeWork’s public offering arrives as vaccinations are ramping up across the U.S. and large tech companies — such as Facebook and Microsoft — are making plans to return to the office. Despite losing $3.2 billion last year, WeWork said it’s well-positioned globally to capitalize on folks returning to offices after the pandemic.

The IPO: WeWork’s merger with BowX will provide it with roughly $1.3 billion, including a fully committed $800 million private placement investment. BowX Acquisition Corp. was founded by Vivek Ranadivé, founder of TIBCO Software and owner of the NBA’s Sacramento Kings.

“This company is primed to achieve profitability in the short-term, but the added long-term opportunity for growth and innovation is what made WeWork a perfect fit for BowX. With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitize an enormous industry.”—Vivek Ranadivé, chairman of BowX

Big tech office plans: While planning is fluid, Facebook, Uber, and Microsoft may be bringing back some staff on a voluntary basis starting as early as May, according to The Information.. Other companies, including Salesforce, Pinterest, Google, Zendesk and Okta, are looking at August or September as a possible timeline for staffers’ return.

Silicon Valley’s back-to-the-office outline will likely hearten WeWork investors, as enterprise clients are now the dominant share — more than 50 percent — of the flexible office provider’s clientele. But that hasn't stopped some Redditors from prognosticating WeWork's price is headed to $0.

WeWork by the numbers:

• WeWork reported $3.2B in 2020 revenue — the same as 2019.
• WeWork closed 106 locations in 2020 but still operates 851 offices in 152 cities.
• WeWork has a $4B total sales pipeline and $1.5B in committed 2021 revenue.
• WeWork has raised more than $20 billion in venture capital.

The background: It’s been about 18 months since WeWork was embroiled in scandal.

Founder and former chairman Adam Neumann forged a toxic workplace and dubiously burned cash (including on such endeavors as paying $5.9 million for trademarking the word We.) A new documentary — WeWork: Or the Making and Breaking of a $47 Billion Unicorn — captures the odious culture Neumann fostered.

WeWork investor SoftBank, which owns more than 80 percent of WeWork, paid Neumann a $1.7 billion golden parachute to step down. SoftBank has placed billion-dollar bets on the likes of Uber, Grab, and Didi Chuxing. WeWork's upcoming IPO is a meaningful development for SoftBank, which hopes to recoup its nearly $16 billion of investments in WeWork.

“WeWork has spent the past year transforming the business and refocusing its core, while simultaneously managing and innovating through a historic downturn. As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever. Having Vivek and the BowX team will be invaluable to WeWork as we continue to define the future of work.” —Sandeep Mathrani, CEO of WeWork

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