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WeWork's IPO bet unravels: its $47B private valuation slides toward a $10B float
SoftBank priced WeWork near $47B; weeks after the S-1, Reuters said the IPO could value the company as low as $10B.
WeWork
What the business is
A flexible-office lessor: WeWork signs long-term leases on buildings and sublets desks, offices and meeting rooms to companies on flexible short-term memberships, dressing a real-estate business in technology and community branding.
Starting capital：About $12.8B raised across rounds per Crunchbase data cited in the thread, including roughly $8–9B from SoftBank's Vision Fund; the last private round valued WeWork near $47B.
How it started
WeWork began around 2010 — its own S-1 says 'Nine years ago, we had a mission to create a world where people work to make a life, not just a living' — and grew into a 'community company' whose stated mission was to 'elevate the world's consciousness.' It signed long-term leases and sublet flexible space, reached roughly 833 locations and close to 300,000 members by 2019, and raised about $12.8B, much of it from SoftBank's Vision Fund.
What happened
After the S-1 became public in August 2019, scrutiny was immediate: Bloomberg reported that WeWork had lent founder Adam Neumann money as it paid him rent on properties he owned (four of its 833 locations), his dual role as landlord and CEO drew press attention, and the prospectus's 'community company' language became a punchline. Commenters calculated WeWork lost about $0.50 for every $1 of revenue, compared it with Regus/IWG — similar square footage, profitable, worth roughly $4.5–9.8B — and Aswath Damodaran publicly estimated the equity at about $13.75B ($26/share) against lease-and-debt obligations of ~$23.8B. IPO talk fell from initial reports near $65B, or the $47B actual round, to $20–30B, and then to a possible $10B.
How it ended up
By 2019-09-13 the bet was visibly breaking: sources told Reuters WeWork was considering an IPO valuation as low as $10B — roughly an 80% cut from the $47B private round — and the thread's consensus was that WeWork needed the IPO's cash (about $3B raised to unlock $6B of credit) but could not get it at the price its investors had set.
Background
WeWork was founded around 2010 as a 'community company' — its S-1 mission was to 'elevate the world's consciousness' — but its business was real estate: signing long-term leases on buildings and subletting flexible, fully managed space to companies and individuals. By 2019 it ran roughly 833 locations with close to 300,000 members and had raised about $12.8B, much of it from SoftBank's Vision Fund, whose last round valued the company near $47B.
The bet behind the 2019 IPO was that public investors would accept that tech-style valuation for a leasing business: reports initially floated $65B, and the company was said to need about $3B from the offering to unlock $6B of credit. The S-1 punctured the story within weeks — founder Adam Neumann had been lent money by the company while it paid him rent on buildings he owned, and losses ran around $0.50 per $1 of revenue. Commenters compared WeWork with Regus/IWG, which ran similar square footage profitably at a fraction of the price, and Damodaran valued the equity near $13.75B.
On 2019-09-13 Reuters reported that WeWork was considering an IPO valuation as low as $10B, an ~80% markdown from the last private round in a matter of weeks. The story drew 190 points and 219 comments on Hacker News the same day, with the discussion split between whether $10B was still too generous for a money-losing sublessor and whether SoftBank's $47B price had ever meant anything at all.
What has to be true
- The S-1 forced a re-read of the company: a 'community company' prospectus met a business losing ~$0.50 per $1 of revenue, and founder loans plus landlord conflicts destroyed trust.
- The valuation was set by one buyer, SoftBank, at ~$47B; public comparables said lessor economics — Regus/IWG ran similar square footage profitably at roughly $4.5–9.8B enterprise value.
- WeWork needed the IPO more than investors did: an ~$3B raise was tied to ~$6B of credit, so it could not walk away when price discovery went against it.
- Real-estate costs do not behave like software: leases and build-outs make every new member expensive, so growth could not justify technology multiples.
What can be applied
A price set by one investor is not a market value: when a capital-hungry lessor meets public buyers, its economics get repriced in weeks — $47B to $10B was the market's verdict on the business.
Aftermath
As of 2019-09-13 WeWork had not priced its IPO; sources told Reuters the company was considering a valuation as low as $10B, and the thread's discussion treated the offering as hanging on whether SoftBank and WeWork would accept terms roughly 80% below the last private round. The material records nothing after that date, so whether WeWork withdrew, replaced leadership or eventually listed is outside this case.
Sources
- WeWork considers IPO valuation of as low as $10B
- Exclusive: WeWork considers IPO valuation of as low as $10 billion: sources
- WeWork Gave Founder Loans as It Paid Him Rent, IPO Filing Shows
- WeWork S-1 registration statement
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