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WeWork finally goes public. Much has changed

2021-10-21T23:29:03.884Z


WeWork finally goes public. After two tumultuous years you are ready to try again.


CHICAGO, ILLINOIS - AUGUST 14: A sign marks the location of a WeWork office facility on August 14, 2019 in Chicago, Illinois.

WeWork, a real estate firm that leases shared office space, announced today that it had filed a financial prospectus with regulators to become a publicly traded company.

(Photo by Scott Olson / Getty Images)

(CNN Business) -

When WeWork's plans for its successful initial public offering fell apart in 2019, the company set an example for the excesses of venture capital and startup culture in the post-2008 era.


"What happened to WeWork is not just a failure of this particular group of individuals," wrote Shira Ovide, a columnist for The New York Times who was at Bloomberg at the time.

"It's a by-product of the last decade of easy money that has seen investors pouring money into assets that promise to grow rapidly. These have been times of utmost stupidity and they won't last forever."

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Now, after two tumultuous years that included changes in company leadership and a historic pandemic, WeWork is ready to try again.

What Happens:

The flexible office space provider's shares began trading on the New York Stock Exchange on Thursday under the ticker symbol "WE."

But it's a different deal, a different world, and a very different WeWork.

Before

: Initially, WeWork sought the public offering for sale (IPO).

The bankers were expected to give the company a spectacular valuation.

At its peak, private investors believed WeWork was worth $ 47 billion.

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Now

: Thursday's listing follows a merger with BowX Acquisition Corp., a special purpose acquisition company, or SPAC.

The deal values ​​WeWork at roughly $ 9 billion.

Before

: When WeWork released its 2019 IPO prospectus, questions quickly arose about how fast it was burning cash.

The company shared that while its business was growing rapidly, it had lost a staggering $ 1.9 billion in 2018 and $ 904 million in the first six months of 2019.

WeWork's corporate governance also came under the microscope after it was revealed that co-founder and then CEO Adam Neumann had amassed enormous voting power, giving him extensive control over the direction of the company.

Now

: Under Sandeep Mathrani, the real estate veteran who took over as CEO in early 2020, WeWork cut costs and overhauled its leasing portfolio.

However, the company continues to lose money.

Following the deal with SPAC, which will raise $ 1.3 billion, Neumann will have a voting power of around 11%.

Columbia Business School professor Len Sherman said taking the SPAC route allows WeWork to avoid the scrutiny it has attracted in the past.

"The advantage of a SPAC offering is that it allows WeWork the ability to make optimistic and forward-looking growth projections that would not be allowed under traditional regulatory IPO rules," he told me.

Before:

What is covid-19?

Now:

The pandemic has dramatically changed the market for office space as more people work from home.

"We believe that increased work from home reduces demand for offices by about 15%," Daniel Ismail, principal analyst for the Green Street office team, told me.

"That is a true paradigm shift."

However, it is not all bad news for WeWork.

Ismail believes companies will want more flexible arrangements as workers return, and will favor signing one- or two-year contracts with a company like WeWork rather than securing longer eight to 10-year leases.

He predicts that the flexible office market, which currently represents only 2% of total office inventory in the United States, could reach 10% by the end of the decade.

That said:

Shares in IWG, which Ismail says is WeWork's main publicly traded competitor, are down 13% this year as uncertainties persist.

One more thing:

Neumann is infamous now (he will be portrayed by actor Jared Leto in an upcoming Apple TV + series).

But that doesn't stop you from celebrating WeWork's delayed debut.

The Financial Times reports that Neumann will host a party in New York on Thursday with the first employees at the Standard Hotel.

Delta variant could delay economic recovery 1:03

What problems in the supply chain?

Tesla records a record quarter

Automakers around the world are struggling, as problems with securing crucial parts affect production.

Tesla is not exempt, but it is proving tough.

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The latest:

The company reported another record quarter after US markets closed on Wednesday.

Between July and September, it made $ 1.6 billion in profit, an increase of 389% over the same period last year.

Revenue was up 57% compared to 2020, even as the company made less by selling regulatory credits to other automakers, who use them to meet environmental standards and avoid large fines.

Analysts have warned that Tesla should be less reliant on that line of business, which is lucrative but expected to decline as competitors ramp up EV production.

It's still tough

: The company cautioned that it is experiencing difficulties sourcing computer chips and other materials, even if it was able to overcome those problems in the third quarter.

Tesla previously disclosed its record sales for the period, up 20% from the previous three months and 73% from the previous year.

"Due to parts shortages and logistical variability, we have not been able to operate our factories at full capacity," CFO Zachary Kirkhorn told analysts.

"It is important to note that while we have roughly doubled deliveries so far this year, this has been exceptionally difficult to achieve."

Kirkhorn said customers are waiting longer for vehicles and delays are increasing.

"The only practical way to address this in the immediate term is to do everything possible to build more cars on our existing production lines," he said.

Investor outlook

: Stocks fell more than 1% in pre-market trading.

Tesla breaks earnings record again 1:05

Pinterest shares soar with PayPal takeover talk

Could PayPal buy Pinterest?

Investors in the social media company are certainly looking forward to it.

  • Pinterest shares soared on reports that PayPal could buy it

Pinterest shares soared nearly 13% on Wednesday after media outlets reported that the online payments provider could buy the website.

PayPal shares fell 5%.

The deal could be valued at $ 45 billion, making it the biggest tech deal of the year, Bloomberg reported, citing people with knowledge of the matter.

Reuters and The Wall Street Journal have also reported PayPal's interest, citing sources.

The thought

: PayPal takes steps to become a "super app" in the vein of Alibaba's Alipay and Tencent's WeChat, which are huge in China.

Last month, the company introduced a new "all-in-one" interface with a high-performance savings account, an invoice management system, and new purchasing tools that enable customers to earn rewards.

Pinterest has also been rolling out new features to make shopping easier on its site and is trying to push its bids for advertisers.

"The potential deal would be a big game changer for [PayPal], but we think [the Pinterest deal] makes sense within the context of [PayPal's] broader business push," Barclays analyst Ramsey El- Assal.

Pinterest is known as a feel-good corner of the internet.

But it doesn't come without luggage.

The company paid $ 22.5 million last year to settle a gender discrimination lawsuit filed by its former chief operating officer.

He did not admit liability as part of the settlement.

How does PayPal work?

1:02

WeWork

Source: cnnespanol

All news articles on 2021-10-21

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