WeWork lost $3.2 billion last year, according to documents shown to prospective investors by the office-sharing startup in a pitch for $1 bn in investment and a stock market listing, the Financial Times reported recently.
The documents revealed that losses narrowed from $3.5 bn in 2019 and that the company plans to go public at a valuation of $9 bn including debt, through a merger with a special purpose acquisition company (SPAC), the report said.
Those losses came despite WeWork cutting its capital expenditures to just $49 million, down nearly 98% from $2.2 bn in 2019, as occupancy rates at its properties plummeted from 72% to 47%, according to the Times report.
But WeWork is still eyeing a public offering, now through a potential merger with BowX, a SPAC, the report said.
A SPAC transaction has obvious appeal as it would make WeWork less dependent on majority owner Softbank Group Corp. for funding.
The new valuation of WeWork
The new valuation would be less than a fifth of the $47 bn WeWork sought when it initially announced its plans for an initial public offering in 2019. Those dreams were shattered amid revelations about the company’s shaky finances managed by founder and then-CEO Adam Neumann.
WeWork’s most recent projections included revenues of $7 bn by 2024, adjusted earnings of $485 mn next year and 90% occupancy rates by the end of 2022, according to the Financial Times.
Since its downfall, WeWork has been mired in legal and financial trouble. SoftBank, the company’s largest stakeholder, injected billions of additional funding into the company to help keep it afloat even as other investors sought to back out.
The new futuristic WeWork co-working environment
Companies are rethinking whether they really need a large headquarters and more staff may work from home for at least part of the week. To appeal to firms that employ these occasional commuters, WeWork has started offering a pay-as-you-go option.
Investors are excited suddenly about companies that stand to profit from the shift to hybrid working.
WeWork will now allow clients to rent offices and even individual desks for any length of time, not just on an annual basis. It also introduced “all-access” memberships that let people work from any of its locations for a flat monthly fee.
Companies can buy these for employees in addition to renting desks at a particular location, for even greater flexibility.
WeWork is also designing its new spaces to be modular. They’ll include freestanding private offices, complete with air-quality sensors and noise-canceling, that can be built or disassembled in a single day.
WeWork is even rolling out holographic technology at its locations to let organizations host global events without having to cram hundreds of people into one building.
At WeWork spaces, each lobby, or ‘center of gravity’ is being turned into a marketplace with extras like food delivery areas, laundry facilities, and Amazon lockers. Those marketplaces will be open to everyone who works in the same building, not just WeWork members.