WeWork, the latest ‘unicorn’ company to set its sights on stock market floatation, have seen increasing doubts about stepping onto the stage of the NYSE after questions arose about whether they would debut on the market this year at all.
Seen as one of the most anticipated debuts of the year by international investors, WeWork’s major shareholder SoftBank has reportedly told the New York firm to put the brakes on their debut and eventually drop its flotation plans altogether under the threat of a drop in share prices.
This comes after reports that outside firms are not valuing WeWork as highly as they did over a year ago when plans to float were first announced.
SoftBank, the Japanese investment firm who owns a 30% stake in WeWork, is reportedly worried that their initial valuation of approximately $47bn was too high and if the company were to float, investors would be disappointed by early share performance.
There is growing concern that their own shares could be worth less than $20bn if the company were to go on with its plans to join the stock market.
The company, which sells working office spaces to companies and individuals (including day traders via etradinghq), may be more susceptible to big losses if they float in the event of an economic downturn, critics have warned.
Like many of its high-risk neighbour companies, WeWork loses huge amounts of money despite ever-growing revenues. In 2018 alone, the company lost $1.6bn, even though their revenue doubled from the previous year.
Concerns are also rising for other ‘unicorn’ companies, who, after heading for the stock market, suffered bumpy starts and quickly dropping share prices. This occurred after their highly anticipated shares underperformed in their first few weeks.
WeWork’s plan to float on the stock market was controversial as the company has faced increasing questions over its corporate structure, transparency of finances and overall profitability from investors.
The company is part of a batch of Silicon Valley ‘unicorns’ – companies that make little to no profit but are still valued at over $1m USD- and follows in the footsteps of Airbnb, Pinterest and Stripe, all of whom will or have already floated on the NYSE.