WeWork Is the Most Ridiculous IPO of 2019

WeWork – now rebranded as The We Company (WE) – filed its initial S-1 on August 14, and the company reportedly plans to go public in September. There isn't official pricing information, but the company’s most recent funding round – a $2 billion investment from SoftBank in January – valued the co-working company at $47 billion. At this valuation, WeWork would be the 2nd largest IPO of 2019, trailing only Uber (UBER).

WeWork might not be the largest IPO of 2019, but it is easily the most ridiculous, and the most dangerous. At least, Uber and other recent big-money IPO’s offered some legitimate innovation in their business models even if their valuations were far too high. WeWork has copied an old business model, i.e. office leasing, slapped some tech lingo on it, and suckered venture capital investors into valuing the firm at more than 10x its nearest competitor. The company also burns tons of cash, carries huge risk factors in a recession, and sports some of the worst corporate governance practices I’ve ever seen. WeWork (WE) is in the Danger Zone.  

No Innovation in the Business Model – Just More Risk

WeWork was founded in 2010 in the SoHo district of New York City to provide co-working space, primarily for freelancers and small startups. In the nine years since its founding, the company has grown rapidly and consists of 528 locations in 111 cities and 29 countries.