What’s the deal with 2019’s IPO class? Companies that have gone public have been disappointing, with Uber probably topping this list. Lyft didn’t fair anywhere close to what we expected either, and with the two ride hailing companies having had the most anticipated of IPOs in a while, that they ended up being duds was an eventuality no one could have seen coming.
Given the current atmosphere, it is understandable why companies such as Postmates and Palantir have had to shelve their IPO plans. They’re probably waiting for the dust to settle, or hatching up a plan to ensure their valuations remain high.
Not According to Plan
WeWork is another company that intended to go public, but things haven’t quite gone as planned. Having filed its paperwork in August, the workspace provider went on to have a tumultuous month, and we’ve got all the juice in one space.
It seems as though filing the IPO paperwork was the beginning of the end for WeWork, seeing as it led to increased scrutiny on the company’s operations. Of interest has largely been the business dealings and behavior of CEO Adam Neumann, and the heat has been too much that he’s soon to step down.
Among the issues brought to light were Neumann’s multiple conflicts of interest. According to the documents that the company filed, its CEO owns the buildings that WeWork uses for its workspaces, and that he has been renting them out to the company.
As if that’s not all, Neumann also cut himself a fat check for the TM rights to “We”, the first part of the company’s name. You get why this is a serious issue, don’t you?
With many more transgressions by the CEO coming to light, it was also revealed that top members of staff have been leaving the company, blaming Neumann and plunging the company into an even worse state. That WeWork has been making spiraling losses does little to salvage the situation.
According to Business Insider, the past month is arguably the worst in WeWork’s history, as investor interest continues to dwindle. In light of this, the company has indefinitely postponed its public offering, an announcement that was made along with the one about Neumann’s resignation.
Retaining the Seat on the Board
However, the man will still retain his seat as chairman of the board, despite cashing out $700 million from WeWork before its IPO. This move was quite unusual, no wonder it raised eyebrows. Normally, founders wait till their companies go public before cashing out because the assumption is usually that the stock will increase in value.
Another issue that painted WeWork in negative light was the fact that it was deemed to alienate women. Of the seven directors in the company’s board, none of them is female, and with equality being a contemporary debate, the company was seen as being on the wrong side of current affairs.
Before the S-1 filing, WeWork had been valued at $47 billion. The figure was announced in January 2019, but this far into the year, experts are terming it a ridiculous valuation. Word is now that whenever they hold their IPO, the company’s valuation will be at $10 billion.
That’s a long way down from their initial valuation, right? But as they say, misfortunes never come singly.