WeWork may cut IPO valuation to $10 billion
WeWork owner The We Company may seek a valuation in its upcoming initial public offering of between $10 billion and $12 billion, a dramatic discount to the $47 billion valuation it achieved in January, people familiar with the matter said on Friday.
Were the We Company to press on with the IPO at such a low valuation, it would represent a major turning point in the venture capital industry’s growth over the last decade, that has led to the rise of startups such as Uber Technologies Inc , Snap Inc and Airbnb Inc.
It could mean that the We Company would be valued less than the $12.8 billion in equity it has raised since it was founded in 2010, according to data provider Crunchbase. And it would represent a major blow to its biggest backer, Japan’s SoftBank Group Corp, at a time it is trying to amass $108 billion from investors for its second Vision Fund.
The sources cautioned that no decision has been made and asked not to be identified because the matter is confidential. WeWork and SoftBank did not immediately respond to requests for comment.
Investors have expressed concerns about the U.S. office-sharing start-up’s business model, which relies on a mix of long-term liabilities and short-term revenue, raising questions about how it would weather an economic downturn. It rents out workspace to clients under short-term contracts, even though it pays rent for them itself under long-term leases.