What is going on with WeWork?
In recent days the coworking sector speaks only of one subject. The news from WeWork and its co-founder Adam Neumann are in the spotlight. The coworking space giant announced that it is withdrawing its IPO request to focus on its business. What is the origin of your problems?
WeWork, one of the most valuable and popular American startups, is at the center of a controversy. In January alone, it was considered the second largest real estate company in the world , with a value of more than 40,000 million euros. It was created in New York in 2010 by Adam Neumann and Miguel McKelvey. During the last nine years it has managed to popularize the new work model, creating flexible, international and ideal spaces for small businesses or freelancers. Today the company operates more than 500 offices in 125 cities and, despite being a globally renowned brand, it still does not generate enough money to exceed the costs it generates.
In August WeWork was preparing its debut on Wall Street. However, a few days ago he canceled his IPO and fired his CEO, Adam Neumann. The public image of the co-founder, his high pretensions and several murky businesses did not help the company. He received his first negative reviews after the company's prospectus for the initial public offering revealed large losses and a wide discrepancy in the distribution of power between him and the other shareholders.
The reaction of banks and investors to WeWork's initial public offering has not been favorable. As the EFE affirms, recently the valuation of the company could fall from 47,000 million dollars to 20,000 million or even below. In 2019, it had net losses of 1,900 million dollars and in the first half of this fiscal year it entered 1,540 million dollars, with a record of net losses of 900 million.
As El Confidencial explains, WeWork "survives thanks to continuous financing injections that make mattresses and would need to change part of their model so that investors trust that they will get something in exchange for giving them their investment."
According to the New York Times, board members and investors pressured Neumann to resign. On September 24, Neumann agreed to resign as CEO. Now Artie Minson and Sebastian Gunningham will be the new executive co-directors of WeWork. The company declares that they are not looking for a new CEO. In a statement issued by WeWork Neumann, he said: “Although our business has never been stronger, in recent weeks, scrutiny directed towards me has become a significant distraction, and I have decided that the best thing for the company is to resign as a director executive". However, he will continue to hold the post of non-executive chairman of We Company, the "sister" company of WeWork.