WeWork Goes Public, Finding a Warmer Reception This Time


(Bloomberg) -- A lot has changed since WeWork Inc. first tried to go public: a new leader, fewer employees, a global pandemic. One thing that remains the same: It still loses money.

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In fact, at $2.98 billion, the loss in the first half of this year is three times wider than in the same period in 2019. Still, investors were more welcoming this time around, sending the stock up 8% in the first minute of trading Thursday.

This week's deal is the culmination of a two-year saga to take WeWork public. When it last tried in 2019, WeWork was a giant in real estate and technology. The company, which rents office space, was one of the world's most richly valued startups and the largest office tenant in its hometown of New York City, with locations around the globe.

Listen to the podcast: Foundering: The WeWork Story

Adam Neumann, the towering co-founder, had carefully polished the company's image over nearly a decade, but the prospectus for WeWork's initial public offering peeled the veneer right off. The filing for the company laid out a series of personal and professional conflicts for Neumann -- apparent cases of nepotism, questionable loans and other controversial transactions -- and mounting losses.

The company's loss of $905 million in the first half of 2019 would have been even worse if not for a one-time accounting gain from a modified loan at the time. Yet, it was enough to contribute to WeWork's near-collapse. Within months, Neumann was out of a job, WeWork almost ran out of cash, and a major shareholder, SoftBank Group Corp., agreed to bail the company out.

Read more: Will SoftBank get its $17 billion back?

The current chief executive officer is Sandeep Mathrani, a longtime real estate executive. Neumann, whose name was referenced 169 times in the 2019 IPO prospectus, still looms large. His name comes up 197 times in a registration statement for the merger with a Nasdaq-listed special purpose acquisition company, BowX Acquisition Corp.

Although Neumann forfeited his management role, he retains a stake in the business of 9% and a net worth of about $2.3 billion. Neumann, 42, was also granted the right to return to WeWork board meetings in about four months as an observer.

After the IPO disaster, WeWork's business was further battered by the coronavirus pandemic. Many customers canceled leases and stopped paying rent when the economy turned and workers stayed at home. WeWork's loss ballooned to more than $2 billion in the first quarter of this year.

Read more: No Neumann, no drama but still lots to prove

Things have rebounded in recent months, WeWork executives have said. Revenue in the first half of the year was $1.19 billion.

WeWork now trades on the New York Stock Exchange under the ticker symbol WE. Although the stock climbed Thursday, the deal value of about $9 billion is a sharp drop from the $47 billion valuation SoftBank gave the business in 2019.

SoftBank and WeWork see a bright future, though. The post-virus office environment is poised to benefit flexible offices, the companies have said. More large businesses are signing up, WeWork said, as workers increasingly detach from regular offices.

Mathrani had said in January that WeWork would be profitable by year-end. WeWork has since revised that forecast. The company said it'll generate positive free cash flow next year.

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