Top 10 Things to Know about the WeWork IPO
August 14, 2019 | Blog

Top 10 Things to Know about the WeWork IPO

This morning, The We Company (formerly WeWork) filed its S-1 registration document in advance of its IPO to come in the next few months. While the company is yet to release pricing information, its current private valuation of $47 billion gives it the potential to be the largest remaining Unicorn IPO of the year. Here are ten things we learned from the filing:

  1. The company will trade under the ticker “WE” on a yet to be determined exchange.
  2. High revenue growth – The company’s revenue has more than doubled each year from 2016 to 2018. Revenue in the first six months of 2019 has been nearly 85% of total revenue for 2018.
  3. Substantial history of losses – Losses from operations have historically hovered around the same magnitude as revenue. Losses this year have totaled $1.4 billion on $1.5 billion in revenue.
  4. WeWork has three classes of common stock and intends to list its “Class A”, which is granted one vote per share. Each share of Class B and Class C common stock have 20 votes per share. This voting structure is fairly common among venture backed companies.
  5. Operating cash flows – Despite heavy losses, cash outflows from operations totaled $177 million in 2018, compared to cash inflows of $244 million and $176 million in 2017 and 2016, respectively.
  6. Cash used in investing activities – Purchases of property and equipment totaled $2.1 billion, $1.0 billion, and $776 million in 2018, 2017, and 2016, respectively.
  7. Entities related to SoftBank, Benchmark, and J.P. Morgan represent the largest institutional shareholders, though their ownership percentages are not explicitly broken out in the filing.
  8. Large addressable market – WeWork claims its target market opportunity to be $1.6 trillion, representing 280 targeted cities and a population of 255 million.
  9. Cash and debt – As of June 30, 2019, WeWork had $2.5 billion in cash and equivalents and $1.3 billion in long-term debt. Per its filing, the company is planning on drawing down $1 billion from a newly established credit facility concurrently with its public offering.
  10. What’s missing? The filing did not mention “occupancy rate” or vacancy rates. The WSJ reported in March that the company claimed a decrease in occupancy rate to 80% at the end of 2018. This figure may be something that is requested as the company proceeds through its roadshow.

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This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

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Alejandro Ortiz

Alejandro Ortiz

Alejandro is a Research Analyst, Private Investment Research for SharesPost Research LLC. Prior to joining SharesPost, he was a Valuation Analyst at Duff & Phelps with a focus on TMT industries.

PLEASE READ THESE IMPORTANT LEGAL NOTICES & DISCLOSURES

CONFLICTS

This report is distributed by SharesPost Financial Corporation, a member of FINRA/SIPC. SharesPost Research LLC, SharesPost Financial Corporation, and SP Investments Management, LLC, an investment adviser registered with the Securities and Exchange Commission, are wholly owned subsidiaries of SharesPost, Inc.

Recipients who are not market professionals or clients of SharesPost Financial Corporation should seek the advice of their own financial advisors before making any investment decisions. None of the information contained in this report represents an offer to buy or sell, or a solicitation of an offer to buy or sell, any security, and no buy or sell recommendation should be implied, nor shall there be any sale of these securities in any state or governmental jurisdiction in which said offer, solicitation, or sale would be unlawful under the securities laws of any such jurisdiction.

This report does not constitute an offer to provide investment advice or service. Registered representatives of SharesPost Financial Corporation do not (1) advise any member on the merits or prudence of a particular investment or transaction, or (2) assist in the determination of fair value of any security or investment, or (3) provide legal, tax, or transactional advisory services.

ANALYST CERTIFICATION

The analyst(s) certifies that the views expressed in this report accurately reflect the personal views of such analyst(s) about the subject matter therein, including all of the subject securities or issuers, and that no part of such analyst compensation was, is, or will be during their employ directly or indirectly related to their specific views contained in this report.

Analyst compensation is indirectly based upon the growth and success of SharesPost, Inc., including the overall performance of its subsidiaries, the individualized performance of any such analyst, and the development and progression of the overall research effort. SharesPost, Inc. earns revenue from, among other avenues, brokerage sales, and therefore the analyst may indirectly benefit from research reports that have the ultimate effect of increasing trading activity, either through SharesPost Financial Corporation and/or with SharesPost Investment Management, LLC.

DISCLAIMER

This report does not contain a complete analysis of every material fact regarding any issuer, industry, transaction, or security. The opinions expressed in this report reflect the judgment of the analyst at a specific point in time and are subject to change. The information contained in this report has been obtained from sources the analysts consider to be reliable; however, there is no guarantee the any of the information is accurate.

Securities referenced in this report may be offered by SharesPost Financial Corporation, member FINRA/SIPC. SharesPost Financial Corporation and SP Investments Management are wholly owned subsidiaries of SharesPost, Inc. Certain affiliates of these entities may act as principals in such transactions.

Investing in private company securities is not suitable for all investors. An investment in private company securities is highly speculative, involving a high degree of risk, and investors should be prepared to withstand a total loss of your investment. Private company securities are also highly illiquid and there is no guarantee that a market will develop for such securities. Each investment also carries its own specific risks and investors should conduct their own, independent due diligence regarding the investment, including obtaining additional information about the company, opinions, financial projections and legal or investment advice.

Accordingly, investing in private company securities is appropriate only for those investors who can tolerate a high degree of risk and do not require a liquid investment.

SharesPost, the SharesPost logo, My SharesPost, the SharesPost Index, and SharesPost Investment Management are all registered trademarks of SharesPost, Inc. All other trademarks are the property of their respective owners.

Copyright SharesPost, Inc. 2019. All rights reserved.