WeWork Likely To Sharply Reduce Its IPO Valuation To $20 Billion As Skeptical Investors Raise Questions Over Growth Prospects

The office-rental company WeWork is likely to drastically slash its valuation to $20 billion for its upcoming initial public offering IPO, The Wall Street Journal has reported. The company was earlier valued at $47 billion figure when it received its last round of funding from Japan’s SoftBank.

WeWork may also defer its IPO which it was planning this fall and instead go public in 2020.

Ever since the company indicated its plan to list in the stock market, prospective investors have raised questions over the ability of the  shared office provider to become profitable anytime soon. WeWork reported net losses of $1.9 billion for 2018.

Several questions have been raised on the company's adherence to corporate governance norms.

The company’s founder Adam Neumann has come under intense scrutiny for possible conflicts of interests over receiving a payment of $6 million from the company for the trademark rights to the “We” branding.

The company's pre-listing filing with regulators reveals that a total of $20.9 million in lease payments were made to four properties in which Neumann had an interest. The founder received  $11.6 million back in “tenant improvement reimbursements” till last year.

WeWork has also been projecting itself as a tech company rather than as a real estate company. Tech companies typically are valued at much higher amounts than real estate companies. For instance, WeWork's main competitor IWG has a market capitalisation of £3.7 billion despite having a larger footprint in the commercial office rental space.