The company reported huge revenue gains and losses.
Rumors have been circulating for a while that WeWork was getting ready to file for its IPO and this week, it finally happened. The We Company, the parent company of WeWork, released an S-1 that contained information about the company’s financials.
In many ways, the financial paperwork revealed what most people expected about the company. WeWork is growing at an astonishingly fast pace and losing money just as fast.
In 2018, the company’s revenue doubled to $1.7 billion. That’s an impressive figure but WeWork also spent $1.5 billion that same year. And it lost $690 million in the first six months of 2019 alone.
Here are a few things to know about the company’s upcoming IPO:
WeWork is earning and spending money at a rapid pace
The company gets most of its revenue from the rent and service fees it charges individuals and businesses subleasing office space. In 2018, the company’s revenue more than doubled from a year earlier to reach $1.7 billion. And WeWork is on track to grow its revenue at that same pace this year.
However, the company also spent $1.5 billion on expenses related to its office locations including employees, utilities, taxes, and cleaning fees. Investors may be willing to overlook this due to the company’s large revenue gains. But it can’t be ignored that the company’s profit base is razor-thin.
The current CEO will maintain control over the company
One of the interesting things about the WeWork IPO is how much control CEO Adam Neumann will maintain once the company goes public. He owns a type of stock that will give him 20 votes per share. In comparison, any shares sold in the IPO come with one vote.
And thanks to a yearlong “lockup agreement,” Neumann won’t be able to sell or transfer his shares for at least a year. This means new shareholders won’t have a lot of say in how the company is run.
The company isn’t the only big player in the co-working space
WeWork established itself as a major player in the co-working space but it’s far from the only one. The company has several competitors like IWG, a global co-working company. And apps like Deskpass give individuals access to more than 300 co-working spaces in 11 different cities.
However, many people believe that co-working spaces will soon be the norm for many businesses and self-employed individuals. The global market is estimated to reach $26 billion so there’s certainly enough room for more than one major player.
All in all, WeWork is still a gamble at this point. Investors may be willing to ignore this because the company is growing so fast but it’s unclear whether WeWork has a viable long-term strategy.