Flexible office space provider WeWork, valued at $47 billion, made its first step toward an initial public offering (IPO) reports CoStar’s Jennifer Waters.
The company announced this week that it submitted an amended draft registration statement with the Securities and Exchange Commission (SEC) in December. The submission is the first part of the IPO proposal process and a business becoming a publicly traded entity.
If WeWork’s IPO is successful, it will find itself in the company of other well-known private enterprises that have either made or are thinking of making the switch to public markets so they can build investment capital. These companies include Lyft, Uber, social media company Pinterest, and Airbnb.
“This process will enable WeWork to make the decision to become publicly traded, subject to market and other conditions,” the company said in a statement.
While WeWork has not reported a profit yet, it continues to put more money towards growth. The flexible office space provider has noted it has $6.6 billion in cash as of the end of 2018. Others have raised concerns that WeWork’s losses have ballooned.
“We can very much, if we chose to, moderate our growth and become profitable,” WeWork President Artie Minson told The New York Times earlier this year. “But it’s a time for us to continue to accelerate.”
Softbank is currently WeWork’s most high-profile investor since it has put $10 billion in funding into the company, according to CoStar. SoftBank was expected to invest up to $20 billion in the flexible office space company but decided against it in early 2019.
“We have regularly focused on how to take our business to the next level in every respect,” WeWork co-founder Adam Neumann wrote in a company memo. Neumann told his team he’d keep them as updated as he could, but noted there was not an exact timeline or date to share.
WeWork changed its corporate name to We Co. because it wanted to capture all the parts of the company that was founded on flexible office space. Since its founding, WeWork has added a WeLive co-living venture, a WeGrow elementary arm section, the Flatiron School coding education platform, the MeetUp community-building platform, as well as Made by We, a retail and co-working concept, and WeMRKT, a concept that sells WeWork members products.
The company has also become the most prominent office tenant in numerous larger markets like New York and Chicago, while making its presence felt in areas such as Denver and Bentonville, AR, where the flexible office space provider is building a 200,000-square-foot office building, one of its first ground-up development projects. WeWork also has deals to open locations in Atlanta, Tampa, Florida, Los Angeles, Beverly Hills, the greater Houston area, Minneapolis, and Phoenix.
Despite WeWork’s omnipresence, it has seen its occupancy rates drop from 84 percent to 80 percent, according to CoStar. Meanwhile, the average revenue per member decreased by 5 percent. The figures aren’t necessarily alarming, but as the company grows, it will become increasingly more difficult to increase those percentages, which may make investors think twice.