WeWork
WeWork co-founder Adam Neumann set out to change the way people work by establishing collaborative co-working spaces catering to younger workers. He also had plans to expand the brand to residential and educational spaces, too — but those plans might never come to pass after the company’s failed IPO filing in August 2019 and its aftermath.
WeWork initially sought a valuation of $47 billion, but that dropped to $10 billion within a month, Business Insider reported. By November 2019, its valuation was slashed to $5 billion, and its initial public offering has been delayed indefinitely.
Why WeWork Isn’t Profitable
As of July 2019, co-working startup WeWork was losing $219,000 hourly, the Financial Times reported. The company’s disastrous attempt to go public resulted in Neumann stepping down as CEO, as the company revealed huge losses and a confusing corporate structure, CNBC reported. One of the biggest obstacles to WeWork’s profitability is its noncancelable leases and related liabilities. In the case of an economic downturn, it is feasible that the company could be paying more for its leases than its tenants are willing to pay in rent.
But the company is hoping to turn things around. On Feb. 11, WeWork announced its new target of becoming free cash flow positive by 2022; it aims to achieve free cash flow of over $1 billion in 2024, Reuters reported.
