FILE PHOTO: The WeWork logo is displayed on the entrance of a co-working space in New York City, New York U.S., January 8, 2019. REUTERS/Brendan McDermid
(Reuters) – WeWork owner The We Company is considering slashing the valuation it will seek in an initial public offering (IPO) at a little over $20 billion, less than half the $47 billion valuation it achieved in a private fundraising round in January, people familiar with the matter said on Thursday.
The We Company’s deliberations illustrate how growing investor skepticism over the office space sharing start-up’s lack of a roadmap to profitability, and its co-founder Adam Neumann’s firm grip on its governance, are weighing on its IPO prospects.
The We Company has not yet launched its IPO road show to formally solicit feedback from investors. It has been expected to do so later the month.
The sources cautioned that no decision on the valuation has been taken and asked not to be identified because the deliberations are confidential. The We Company declined to comment. The Wall Street Journal first reported that the We Company was mulling an IPO valuation of $20 billion.
The We Company rents out workspace to clients under short-term contracts, even though it pays rent for them under long-term leases.
WeWork, which was rebranded We Company earlier this year, is backed by Japan’s SoftBank Group Corp (9984.T), which has invested or committed to invest $10.65 billion since 2017.
Reporting by Bharath Manjesh in Bengaluru and Joshua Franklin in New York; Editing by Anil D’Silva, Arun Koyyur and Nick Zieminski