Morning Markets: How low can The We Company’s valuation slip before the IPO is called off? And then what? The We Company, better known as WeWork, is a cash-hungry company.
If WeWork managed to go public, say, worth $18 billion, it isn’t inconceivable that the firm would be worth less than the combined debt and equity capital it had raised by that point.
Unspooling WeWork’s venture, debt, and private equity history is difficult.
The firm has raised more capital than $8 billion to date, and if you add the $10 billion that WeWork seeks, you get a number that sounds dangerously similar to its potential valuation.
The Journal notes in the same piece that there are some calls to pull the IPO. Of course, if the IPO is even delayed, how WeWork doesn’t get into trouble is hard to see.
Here are a few numbers regarding its cash supply and consumption from its IPO filing: WeWork cash and equivalents, June 30 2019: $2.47 billion WeWork net cash used by operations, H1 2019: $198.7 million WeWork net cash used by investing activities, H1 2019: $2.36 billion As you can see, the latter two sum to a higher number than the former.
WeWork’s valuation is coming down as its cash needs are at reported–and, possibly, all-time– highs.