Top 10 Biggest Risks in WeWork are Revealed

Adam Neumann co-founder and chief executive officer of We Work
Credit
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In 2018, the company's revenue more than doubled from a year earlier to reach $1.7 billion. In the first six months of 2019, it lost $US689 million ($1.021 billion) of its $US1.5 ($2) billion.

Bankers at the firm knew their decision to balk at the full credit commitment would risk Morgan Stanley's role on an IPO, which is slated for September, some of them said. WeWork said in April that it had submitted its paperwork confidentially to US regulators.

Analysts said We Company's doubling of revenues would help ease investor concerns, but they remain cautious.

"WeWork is pushing the outer bounds of what's acceptable for a public company", said Glenn Davis, research director at the Council of Institutional Investors, an investor advocacy group.

The chart above tracks the reduction in job postings for building design and development fall 48% (also, we noted a decline in recent months for job postings for building operations - not shown) - and, the one below tracks the reduction in job postings for legal and finance professionals (legal, not shown).

The fact that of WeWork's 2018 revenue ($1.8 billion) 93% was achieved through memberships (leases that customers pay to rent space) indicates that WeWorks' revenue source is more representative of a landlord than a tech firm. In time, WeWork, which is officially known as the We Company, expanded to offer larger spaces to corporate tenants such as Expedia, JPMorgan Chase and Siemens.

The office rental company listed an offering size of $1 billion, which is typically a placeholder that will be revised when terms of the share sale are set later.

WeWork is not the first space-as-a-service company to face an uphill battle heading into a recession. This includes a future successor of the soon-to-be public corporation, in which a clause dictates that a new leader would be handpicked by Rebekah Neumann along with "two or three" others, in case of Adam Neumann's death or incapacitation.

Neumann has personally owned parts of office buildings WeWork leases. This company is a leap of faith, as are numerous young tech-ish companies hitting the stock market.

The company is moving forward with its plans to go public despite losing a staggering $1.9 billion past year, according to its IPO prospectus, an unprecedented amount for a company about to go public. If it happens, it'll be the second biggest tech IPO since Uber, and undoubtedly the most controversial. The rash of companies going public has come within the context of a almost decade-long run without a major global recession.

Worldwide, WeWork now operates 528 co-working locations with 527,000 members as of the end of June.

We Company's revenue has surged as the company shakes up office leasing by offering start-ups and entrepreneurs short-term contracts in lieu of traditional long-term leases.

Rumors have been circulating for a while that WeWork was getting ready to file for its IPO and this week, it finally happened.

WeWork's parent company, The We Company, submitted the S-1 filing which listed $1 billion as the targeted amount to raise from the IPO, though that targeted figure can often fluctuate. CEO Adam Neumann will also hold 50% of shareholders' voting rights after the IPO, along with upwards of 110 million shares in the company that could make him billions of dollars.

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