WeWork IPO: Company’s Second Stock Attempt Comes by SPAC
The WeWork initial public offering (IPO) is back! After it shelved its offering in 2019, WeWork had investors unsure of when, or if, the company would try to make a comeback. But it looks like WeWork stock is coming after all. Here’s what we know…
WeWork IPO: The Business
If you’re unfamiliar with WeWork, it’s a commercial real estate company providing flexible shared workspaces. Founded in 2010, the company designs and builds both physical and virtual shared spaces and offices.
WeWork opened its first location in New York City. Now WeWork offers over 850 locations in more than 150 cities worldwide. It works with all kinds, from freelancers to Fortune 500 companies. Some of its customers include Microsoft, Zoom Video Communications and Pfizer.
The company claims COVID-19 accelerated demand for flexible workspace options. WeWork believes it’s in a unique position to capture that market. But investors are skeptical about the WeWork IPO after its failure in 2019.
WeWork Stock’s Failed Attempt
A lot happened leading up to the downfall of the WeWork IPO. The company confidentially filed with the U.S. Securities and Exchange Commission in April 2019. For those unfamiliar with confidentially filing, companies are able to do this in accordance with the Jumpstart Our Business Startups (JOBS) Act. Companies have to make their filings public no less than 15 days prior to the offering.
However, in July 2019, The Wall Street Journal published an article titled “WeWork Co-Founder Has Cashed Out at Least $700 Million Via Sales, Loans.” The co-founder mentioned is CEO Adam Neumann. This $700 million was before the IPO, which is often a red flag. It makes investors question their confidence in the company.
On August 14, 2019, WeWork publicly revealed its filing. And it faced a lot of criticism for its finances and company leadership. As a result of the backlash from both investors and the media, the WeWork IPO was delayed on September 16, 2019.
Afterward, WeWork forced Neumann to step down as CEO but remain chairman of the board. Then WeWork’s largest investor, Softbank, took over. It gave Neumann $1.7 billion to step down as chairman. It then gave the company a valuation of $5 billion. And finally, the company laid off 2,400 employees.
So in summary, the WeWork IPO was a mess. And investors didn’t think WeWork stock would come back for a second attempt. But the company announced WeWork stock is coming via a special purpose acquisition company (SPAC) IPO.
SPAC IPO: BowX Acquisition Corp.
SPACs have no business operations. In fact, SPACs go public to raise funds. It then puts those funds into a trust account until it can find a company to acquire. Once a target is identified and a deal is made, the company is acquired or merged and results in a public company. In this case, WeWork is the acquiree and BowX Acquisition Corp. (Nasdaq: BOWX) is the SPAC.
WeWork’s CEO Sandeep Mathrani stated…
WeWork has spent the past year transforming the business and refocusing its core while simultaneously managing and innovating through a historic downturn. As a result, WeWork has emerged as the global leader in flexible space with a value proposition that is stronger than ever. Having Vivek and the BowX team will be invaluable to WeWork as we continue to define the future of work.
Co-CEO of BowX Acquisition Vivek Ranadivé added…
I’m thrilled to partner with Sandeep, Marcelo and the entire WeWork team as they continue to transform this business and the real estate industry at large. This company is primed to achieve profitability in the short term, but the added long-term opportunity for growth and innovation is what made WeWork a perfect fit for BowX. With a fantastic core business, I see WeWork as a company at an inflection point, with an incredible roster of key members coupled with the vision and leadership to digitize an enormous industry.
Investors interested in WeWork stock can look at the company’s investor presentation for more information. And for those interested, let’s look at what the transaction consists of.
WeWork SPAC IPO Details
The merger agreement values WeWork at $9 billion. BowX will give $483 million from its trust. Additionally, there is a fully committed $800 million private investment priced at $10 a share. It’s led by Insight Partners, Starwood Capital Group and Fidelity Investments, to name a few. WeWork expects to have $1.9 billion in cash and total liquidity of $2.4 billion.
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What is the WeWork IPO date? According to the announcement, investors can expect WeWork stock in the third quarter of 2021. The announcement didn’t reveal a ticker symbol, but it’s possible WeWork stock will trade under the symbol “WE” as originally planned in 2019.
About Amber Deter
Amber Deter has researched and written about initial public offerings (IPOs) over the last few years. After starting her college career studying accounting and business, Amber decided to focus on her love of writing. Now she’s able to bring that experience to Investment U readers by providing in-depth research on IPO and investing opportunities.