WeWork: Big valuation, little profit

It's quite possible that the coworking giant, WeWork, under the umbrella of companies for the We Company, may have a valuation of $47 billion. However, the startup seems to be losing money; around $219,000 an hour of every day during the 12 months leading up to March, says the Financial Times.

In 2018, WeWork's losses and revenue both doubled, to $1.9 billion and $1.8 billion, respectively, according to FT. Though the company in March projected $3 billion in revenue in the next year, it lost $700 million in the first quarter of 2019.

In April, CEO Adam Neumann announced WeWork confidentially filed initial-public-offering paperwork in December as the We Company, which also includes Neumann's coliving venture, WeLive, and the "conscious entrepreneurial school" WeGrow. As the company moves toward an IPO, it will need to convince investors that its significant growth makes it a worthwhile long-term investment despite equally large losses.

SoftBank CEO Masayoshi Son is the major investor in WeWork and a mentor to Neumann. Son has invested more than $10 billion in WeWork. In December, Softbank was expected to invest $16 billion in WeWork but ended up investing only $6 billion, with $1 billion of that going toward existing shares, prompting renewed scrutiny of its business model.

Uncertainty about WeWork can be boiled down to three concerns: the stability of its model (pairing long-term office leases with short-term occupants and what that might look like during a recession), its categorization (Should WeWork be compared against tech companies or real-estate companies?), and the wild card that is Neumann.

New York magazine's Intelligencer published a profile of Neumann in June, depicting the CEO as zany and idealistic. Neumann forbid employees from expensing meals containing meat last summer. His commencement speech at Baruch College in 2017 recounted his early years in New York City, which he spent clubbing and "hitting on every girl in the city."

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