WeWork plans to cut valuation to below US$20b

New York

FAST-GROWING office-sharing startup WeWork plans to again cut its valuation, this time to below US$20 billion, and is under pressure from some investors to postpone its stock market debut, sources said on Sunday.

It is the second time in three days that the company has cut its valuation target, after sources said last Thursday that its parent The We Company was revising it down from US$47 billion to US$20 billion over doubts about its prospects from potential investors.

Some investors are also worried about scepticism surrounding the company's business model and want its planned initial public offering to be pushed to 2020, sources said on condition of anonymity.

JPMorgan Chase and Goldman Sachs, the two main underwriters for the initial public offering, will hold a number of meetings with each other and investors to try to ease their fears.

A roadshow to market the shares to new investors that was supposed to kick off on Monday is in doubt, and there are chances that it will not happen that week, sources said.

Investors doubt WeWork's ability to make money fast enough and also wonder if the company is solid enough to withstand a slowdown in the global economy, sources said.

The New York-based startup that launched in 2010 touts itself as revolutionising commercial real estate by offering shared, flexible workspace arrangements, and has operations in 111 cities in 29 countries.

The company lost US$1.9 billion last year with revenues of US$1.8 billion. WeWork has ventured into new areas like residential apartments and education, and tells investors they should see its quarterly losses as investments.

But certain moves by co-founder Adam Neumann, such as personally investing in real estate before renting it back to WeWork, have also caused consternation.

The co-working company, which calls itself a pioneer in the "space-as-a-service" business, provides office space decorated with bright colours and industrial themes, offering free coffee, e-supplies and utilities. AFP