In order to have a successful IPO WeWork needs to address the obvious questions.
In an interview with Yahoo Finance’s On The Move, Atish Davda, EquityZen CEO, outlined three key issues that investors want addressed: WeWork’s governance, its business model and path to profitability.
”I mean, at $20 billion we’re talking about a company that’s worth over 10 times what its competitor’s multiple is and the company produces more losses than revenue that it generates.
”The Wall Street Journal reported that the We Company, the parent company of WeWork, was rethinking its strategy to take the company public ahead of its highly-anticipated IPO. The company is reportedly reconsidering its previously set target of up to $30 billion and may lower that closer to $20 billion.
As WeWork faces tough criticism over its valuation, It appears investors are checking themselves this time around and not getting swept up in IPO mania.
Davda said companies that can deliver growth and profitability will be rewarded “extremely well” but notes while WeWork has delivered growth they need to raise cash in order to do so.
”WeWork may have to come to terms with the fact that “there’s no reason for the company to trade trade at 26 times it sales, which is 25 times higher than its closest competitor, real estate company IWG.”While WeWork may “have brand value and better connect with today’s workforce,” said Davda, there’s little proof, so far, justifying its current valuation.