Oct 21 (Reuters) - Shares of SoftBank-owned WeWork
jumped nearly 9% as they finally started trading in New York on
Thursday, capping an arduous journey to the public markets for
the storied office-sharing company that was once valued as high
as $47 billion.
While WeWork's top management led by current chairman and
SoftBank executive Marcelo Claure insist the worst is over, the
office-sharing firm continues to lose money, two years after an
"WeWork has a low occupancy rate, 55-58% recently, and thus
can grow revenue without increasing costs by very much. It needs
to grow revenue, because it is currently losing close to $1 for
every dollar of revenue that it brings in," IPO expert Jay
Ritter, a professor at the University of Florida, said.
In 2019, when WeWork first embarked on its efforts to go
public under founder and former chief executive Adam Neumann,
the proposed share sale imploded spectacularly after IPO
investors balked at the company's hefty losses, Neumann's
management style, and WeWork's corporate governance lapses.
Once seen as a prized bet for SoftBank chief Masayoshi Son
who personally backed Neumann, the Japanese conglomerate was
forced to bail out WeWork after its valuation was slashed from a
lofty $47 billion to $8 billion following the botched offering
that threatened the company's survival.
Son was subsequently forced to concede https://www.reuters.com/article/softbank-group-results-idCNL3N27M1PO
that betting big on WeWork was a mistake.
WeWork is yet to turn a profit. It reported a net loss
attributable to the company of $888.85 million in the second
quarter, compared with $863.83 million a year earlier.
Shares of the loss-making company, which in March struck a
$9-billion go-public deal with blank-check acquisition firm BowX
Acquisition Corp, were up 10.79% at $11.50 in afternoon
Neumann continues to hold a sizable stake in the business,
valued at nearly $1 billion, and under the terms of his exit
package from WeWork, he will be eligible to observe board
meetings from next year, even though he is not a board member
Neumann's name can be seen dozens of times through the
business combination filing, even though he holds no executive
roles at WeWork anymore.
Neumann also played an indirect role in helping put together
the SPAC deal, Reuters reported in March, and according to a
report from the New York Times on Thursday, Neumann and WeWork's
co-founder Miguel McKelvey held a party on Thursday to celebrate
The real test for WeWork will start now, experts say, as
most companies around the world have adopted hybrid work models
and in several instances, a complete shift to work from home
even after widespread vaccinations.
"Investors are betting that the company has switched from a
model of focusing on growing its office space to a model of
focusing on cutting losses and becoming profitable."
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by
Anirban Sen and Shinjini Ganguli)