WeWork has turned the co-working concept into a global trend, and amassed a valuation of around $47 billion, but can it turn a profit?
Describing itself as a “global network of workspaces”, WeWork leases office space, redesigns and outfits it with services and amenities, and sells memberships in the office sharing scheme to freelancers and startups. It was founded in 2010 by Adam Neumann and Miguel McKelvey, and as of December 31, had 401,000 members in 32 countries. It is the world’s biggest co-working company. On April 29 WeWork announced that it filed to go public in late December, marking the first step towards what could be the year’s second-biggest IPO behind Uber.
WeWork joins a herd of other “decacorns” – privately held companies with valuations of at least $10 billion – which recently started trading publicly or will do so soon. These include tech startups Lyft and Pinterest, valued at around $25 billion and $10 billion, respectively. Uber is the colossus amongst them, with a valuation that reportedly could top $90 billion.
Like Uber, Lyft and others in this generation of startups, WeWork has a grand vision. The stated mission of its parent company, We Company, is “to elevate the world’s consciousness.” Under that rubric, WeWork has expanded into diverse areas beyond its core business. In 2017 it bought Meetup, an online platform that connects people with shared interests. It also opened a private school in New York City, its home base, and invested in a wave-pool company.
So far this approach has been a hit with investors, notably SoftBank, which has made some big bets on what it sees as world-changing enterprises, the New York Times observes. The Japanese multinational is one of WeWork’s biggest investors, putting $10.5 billion into the company to date. WeWork executives say they are seizing an opportunity. “We’re looking at building this business out, not just maximizing profitability over the next one to two years,” said Michael Gross, the office sharing company’s Vice Chairman.
Public investors may not buy into this sentiment, and a look at the share prices of decacorns like Lyft and social media company Snap (which went public in 2017) might lead them to proceed with caution. WeWork’s financial outlook could also give investors pause. Its revenue doubled last year, to $1.8 billion, but its losses more than doubled, to $1.9 billion, with no sign of a reversal in the near future.