WeWork's value plummets below $5 billion
November 11, 2019 - SoftBank slashed its pre-rescue valuation of money-losing WeWork to $4.9 billion, down from its $47 billion value in January.
In just three months, WeWork fell from being one of the most highly valued startups of all time to losing almost 90 per cent of its value. Along the way, its CEO and co-founder, Adam Neumann, was ousted with a billion-dollar golden parachute.
New York City-based WeWork was founded in 2010 by Neumann and Miguel McKelvey to provide co-working space. The company reached the coveted unicorn status -- a $1 billion valuation -- in November 2013. The involvement of Japanese conglomerate SoftBank in 2017 pushed WeWork’s value to $20 billion with 485 locations worldwide. With Softbank’s continued backing, WeWork’s valuation surged to $47 billion in January 2019.
The train wreck started in September after WeWork’s initial public offering (IPO) failed, and within weeks the company needed a rescue from SoftBank.
Stung by WeWork, SoftBank CEO Masayoshi Son says he now aims to be more cautious about the timings of IPOs. Son, 62, said SoftBank Group’s $100 billion Vision Fund will now look to see companies list when they are closer to turning a profit.
“My investment judgement was poor in many ways,” Son said after SoftBank Group plunged to its first quarterly loss in 14 years last week, adding he had turned a blind eye to problems with WeWork’s Neumann.
SoftBank’s Marcelo Claure is WeWork’s new chairman, tasked with executing a turnaround and reinventing the business of subleasing office space.
Graphic News Standards