- WeWork's parent company is considering a valuation of around $20 billion for its IPO, according to reports from The Wall Street Journal and Bloomberg.
- That would amount to roughly half of WeWork's $47 billion valuation from its last private round of funding.
- Softbank, one of the company's biggest investors, may infuse more capital in WeWork.
- A further Softbank investment could allow WeWork to delay its IPO until 2020, the Journal reported.
WeWork's parent company the We Company is eyeing a valuation of around $20 billion in its initial public offering, according to reports from Bloomberg and The Wall Street Journal-- a dramatic drop in value of around 50% compared to its most recent valuation.
The company could also delay its IPO to 2020, according to The Journal.
The Journal's report pegs the possible valuation at around $20 billion, while Bloomberg says the firm is considering a valuation between $20 billion and $30 billion in its IPO. The Journal, however, reports that the valuation could land closer to the low-end range in the $20 billions. That would amount to roughly half of the company's most recent valuation, which Pitchbook lists as $47 billion.
A representative for The We Company did not immediately respond to Business Insider's request for comment. The valuation could be subject to change since the company is still discussing the share sale terms, reports Bloomberg.
Softbank, one of the We Company's biggest investors, may purchase a significant amount of the between $3 billion and $4 billion in shares the company is expected to sell in its IPO raise, serving as an anchor investor, according to The Journal. Another possibility is that Softbank could infuse more capital into the startup that would allow it to delay its IPO until 2020, the Journal said, citing sources familiar with the conversations.
We Company CEO Adam Neumann reportedly flew to Tokyo to meet with Softbank CEO Masayoshi Son to discuss these options.
The We Company publicly filed its IPO paperwork in August, confirming what has been one of the most hotly anticipated market debuts of the year.
Remaining questions about WeWork and its CEO
Leading up to its IPO, various aspects of the We Company's business have come under scrutiny, from its valuation to its business model and CEO Adam Neumann. While its S-1 filing from August answered some questions about the company and its business model, it left others wide open and prompted some concerns.
Among the biggest uncertainties involves how The We Company identities itself, as it seems to straddle the line between being a technology startup and a real estate company. The We Company, for example has purchased software startups to boost its data analytics offerings, but its business model is largely driven by renting office space to tenants.
There's also the question of what could happen to WeWork in the event of an economic recession, which could potentially cause tenants to save money by cutting back on office space -- the crux of WeWork's business model. Neumann, however, has said that WeWork would be well positioned in such a scenario when speaking with Business Insider earlier this year. That's because he says his company offers office space at a cheaper rate than the competition, therefore appeaing for companies looking to slash costs.
Neumann has also raised some red flags for investors through moves such as purchasing buildings and leasing them back to WeWork and raising $700 million over the last five years by selling off his WeWork shares.
Among the most recent developments in the story leading up to WeWork's IPO has been the revelation that The We Company retrieved the $5.9 million it inially paid to Neumann to retain the trademark rights to the word "we" as part of its re-branding ahead of its IPO.
New York University marketing professor Scott Galloway poked some criticism at the company's move to pay Neumann $5.9 million for the trademark in his initial analysis following the S-1 filing:
"Adam also owned the rights to the 'We' trademark, which the firm decided they must own and paid the founder/CEO $5.9 million for the rights. The rights to a name nearly identical to the name of the firm where he's the founder/CEO and largest shareholder. YOU. CAN'T. MAKE. THIS. S---. UP."
The buzzy coworking startup hasn't said when it will list, but it's expected to start its IPO roadshow next week and is considering a share sale of $3.5 billion, according to Bloomberg.