WeWork’s parent is eyeing a valuation for its initial public offering that could fall below $20 billion as some existing investors push the workspace company to shelve the planned offering, people familiar with the matter said.
The latest potential cut comes at a time when IPO demand for companies with a path to profitability is surging and would be particularly painful for investors who have given or committed over $10 billion to the company since it was founded in 2010.
Some investors have indicated interest in the IPO and it is possible the company will pull it off at a valuation of $20 billion or higher.
If the IPO doesn’t happen, the company will either need to find more cash or scale back its plans for further growth, according to people close to the company.
The company is continuing to talk to its biggest investor, SoftBank Group Corp., about whether the Japanese technology giant would put in additional capital through the IPO by buying a significant portion of the shares on offer or invest a chunk of money that would allow We to delay its IPO until 2020.
Since We unveiled its IPO papers last month, potential investors have raised concerns with the company and its underwriters about its steep losses, which amounted to $1.61 billion in 2018, as well as hundreds of millions of dollars of real-estate deals and past personal loans involving the firm and Mr. Neumann.
While the broader market has been largely receptive to newly public companies, investors have been wary of highly valued companies that have logged steep losses.