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Why WeWork Is Considering An IPO Despite Losing $1.9B in 2018

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WeWork's parent company, The We Company, is set to go public this year. It's the latest in a string of richly valued start-ups considering an IPO in 2019. Even though The We Company was recently valued at $47 billion it’s hemorrhaging cash and lost $1.9 billion on $1.8 billion in revenue in 2018. Things improved for WeWork in the first quarter of 2019, but only slightly: The company says it lost $264 million on $728 million in revenue during the quarter. Its core business centers on renting out co-working spaces to everyone from startups and freelancers to large enterprises. WeWork says it’s in 485 locations and has 466,000 members, up from 186,000 in 2017. The We Company's CFO told CNBC that investors should look at WeWork’s losses as “investments” that will lead to more cash flow. However, Lyft and Uber’s recent IPO stumbles could bode poorly for WeWork’s chances of a successful debut, as investors seem wary about taking a bet on companies that lack clear paths to profitability. » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC #CNBC #WeWork Why WeWork Is Considering An IPO Despite Losing $1.9B in 2018
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Text Comments (997)
Unknown User (4 hours ago)
Funded by the Koch brothers
Mirror Mirror Media (1 day ago)
It's like a good idea that was over blown due to low interest rates and the millionaire founders are trying to get Wall Street to take the hot potato off of their hands
shunae86 (1 day ago)
Startup playbook? Which bankrupt startup wrote that in the first place?
vector b (1 day ago)
softbank will cry .....
Khairul Anwar Mokhtar (1 day ago)
Losses are investment? Yeah. Keep telling people that lie. Too big to fail? Nothing! Nothing is to big to fail. The only truth is that when the too big failed, it will be a disaster for the average folks and the small time investors. IPO? Bankruptcy, more likely!
Nordwave PLC (1 day ago)
Right now is an ugly time. Investors pays for nothing. WeWork - big fraud. I hope market will punish it.
Nordwave PLC (1 day ago)
They are not a tech company, they even hasnt own real estate!
Linus Mumford (2 days ago)
“Like other public companies, Lufthansa and uber lost profits” but it’s **not** a public company yet. That’s confusing the facts 👏👏👌
A Blac Pixi Life (2 days ago)
depending on rents as a way to build a company wont work long term...that's why the company failing ....so filing a IPO to raise seems uneffective long term...companies like amazon renting spaces might work short term ....i think
Theo Carbone (2 days ago)
Once wework goes public its taxes government as too big too fail employment centers.
Sea Bass (1 day ago)
You act as though they will pay taxes or as if those office spaces they rent don't pay taxes if they didn't exist.
Kenneth Tan (2 days ago)
Build it and they will come! >__<
MrBigEnchilada (2 days ago)
created 10 years ago and still can't make money lmao. the magic of wall street.
The19LAUNCH (2 days ago)
music 5:19 ????????????????
cian keane (3 days ago)
6:27 the guy on the right looks like ashton kutcher
AAA P (3 days ago)
Im starting WeDeuce shared toilets in office and private residences around the world. We've partnered up with tens of thousands of home and office owners willing to rent out their Toilets to random strangers. When you gotta go take a #2 just open the WeDeuce APP to find the nearest available toilet. 4.99 a month toilet subscription. Or 6.99 WeDeuce Plus includes Toilets in Luxury residences, and prime locations
Fabrice Izzo (4 days ago)
The business model is sketchy but there is value for the users. If you rent a Wework space (even a chair) and network with other users you could find cofounders, investors, partners and initial clients all in one place. You also have access to other Wework space worldwide in very affluent areas. How much would it cost a startup to open an office in the middle of New York in the financial district? What could be the benefit of doing so with Wework for a relatively small fee?
News that matter (4 days ago)
Sounds like a Bubble scheme- Rett Wallace has 20 years of experience as an investor and merchant banker at Allen & Company, Morgan Stanley, Lehman Brothers, and at his own firm
Mac Mac (4 days ago)
"Look at Losses as Investments" huh?
Juan Pablo Telleria (4 days ago)
Well.. we all know how it everything went afterall
B-Roca Holder (4 days ago)
Billion dollar sub-letters Lolol. This is insanity... #Bubble
Gling K. (5 days ago)
WeBankRupt
Inez Qtaish (5 days ago)
Inez Qtaish is suing evildoers and ain't no we work. leave me out of y'all bussiness.
mzamroni (6 days ago)
taking lots of invesment but cannot make profit. it feels like time before the first dotcom burst
SAY FAMI (6 days ago)
White Noise disguised as hipsterpreuership 😁😁😁💣💥😀😒
SAY FAMI (6 days ago)
Honour amongst thieves 101
RP G (6 days ago)
how can a company that just owns a bunch of buildings compare itself to Uber and Lyft LOL what a joke. If I want to rent a desk guess what, I have own a house and can stay home and save money!
SAY FAMI (6 days ago)
Fake news pass 101
rob379 (6 days ago)
We work won’t succeed
B Kay (7 days ago)
Who the hell would use their service? This is the dumbest idea I've ever heard. But it comes with free pretzels tho! Wow I just changed my own mind. I'm in!!!! Nope
Mark (7 days ago)
Remember when a company ACTUALLY had to show a profit
Charles Tan (7 days ago)
Sucker born every seconds
rickie G (5 days ago)
Sucker born every second. Amazingly true! And they will never run out of suckers.
Pedro222 (8 days ago)
WeScam.
Deep Learning Partnership (8 days ago)
Yikes.
Vonte 352 (8 days ago)
Real estate tech company
Angelo Cardinale (8 days ago)
maybe im a fossil being 26 years old but i physically see no point in wework. just work at your desk in your office at your job wtf lmao
Daryl Scott (5 days ago)
Part of it is that wework will rent to businesses for short terms, as low as days at a time. Tiny startups love this flexibility, the unique wework "culture" is designed to appeal to them, and they get "addicted" to the higher-priced wework offices even as they grow. If I didn't know the abominable financials, I might say that it's not a terrible idea.
John Smith (9 days ago)
Ponzi scheme
Paul Pena (9 days ago)
God I can't wait to short this! Hurry up with that IPO, I got payments to make.
snowmanmike (9 days ago)
honestly if you buy this stock you deserve to get burned
Omar Ghaffar (9 days ago)
Remember We Work?
Ditiro Motene (9 days ago)
I heard it’s not even worth 20B
El Ajmidar (10 days ago)
wecash in
Kas Bas (11 days ago)
You seriously ask why ?!! Free cash for owners from dump people that’s why
Tom Underwood (11 days ago)
Back in the days you used to build companies up. Now you start monolithic and wither away into insolvency.
Tom (11 days ago)
neumann is a criminal. even worse than elizabeth holmes.
John Nash (12 days ago)
I tried WeWork for awhile, its horrible.. I call it "The McDonald's of Co-working Spaces" in terms of quality, but you pay a lot for that low-quality and all the pretentious people that workout of them. I've been to 3 different WeWorks and the amount of horrible people I have met was quite a bit.
wahhmann123 (12 days ago)
investors tryna cash out on retail investors
Nurse Kyle (13 days ago)
Too big to fail? Where have I heard that before? Maybe Ford. GM. Lehman brothers. Housing market? Everything can fail. A public company that generates no profit can never stay around.
ALXSSA (13 days ago)
i used to work for a company who was in a wework. wework is cool because it appeals to millennials but their prices are so HIGH. Some companies were paying 10k a month to stay there and they are SHARING a space. Just buy your own place and make it look techy. And, if you want to network, go to NETWORKING EVENTS. People rent space there just to feel cool because the place is beautiful.
Hi Jones (14 days ago)
World's Dumbest Idea
Brendan O'Haire (14 days ago)
What a joke. These people are scam artists.
Eighties (14 days ago)
instead of building an office for rent, why not helping to build affordable public housing scheme for people that needed?
Johnathon Daniels (15 days ago)
Love the video thank you!
Ricardo Piovezan Jr. (16 days ago)
This is beyond ridiculous.
Ben Rivera (16 days ago)
Why bother about Losses,, when the Tax Payers can bail them out??
Nishant Patar (21 days ago)
You dont make dime still get money. Wow look like I have to start this business 🤔🤔🤔
E PD (22 days ago)
Basic business theory = if it doesn’t make money, it don’t make sense. Stop feeding yourselves and investors hopeless promises.
Anton Kukucka (22 days ago)
Cathedral of Hope.
Tarun Kumar (23 days ago)
If anyone invests in this...it means he has no clue about finance and economics.
AlphaMikeFoxtrot (24 days ago)
No one is too big to fail.
arthur g (27 days ago)
$$$💰💰💰💵💵💵💸💸💸💸💸🤑🤑🤑🤑
OhMyGulay (28 days ago)
Lol "growing fast" obviously havent learnt anything from Subway and HH Greg
de132 (29 days ago)
(I wrote this before I watched the video 😂) As long as SoftBank props it up, it'll be fine. The question is, their bet on the real estate of microleases has to be right and if there's ever a large-sweeping recession in the US economy going forward, they're fricked.
Stevo F (29 days ago)
47 billion dollars? I want what they're smoking.
Narek Begian (1 month ago)
This is like the dot.com bubble days all over again.... On steroids
pc (1 month ago)
Adam Neumann buys properties and rents back to WeWork! I wonder if the rental rates Are inflates as well? This is a conflict of interest. The asset isn’t owned by the company but by one private person. WeDodgy
Ronny Gooz (1 month ago)
if Uber is lossing, Lyft is lossing, WeWork is lossing, who are making money?
Justin von Grandia (4 days ago)
Building owners and drivers.
Inquirer 101 (1 month ago)
This is a real estate business plain and simple. It deals in renting out property call it office space or property rental. They want to rent to techies so that suppose to make them a tech company? Huh?! That guy in the video trying to sell this business as a new tech business concept is so full of crap. He's selling a gimmick only with a lot of hype. This company bleeds cash big time. The question is can they get enough tenants and they are facing a big uphill obstacle. How can anyone invest in a company that constantly lose money, sees no real profit for the foreseeable future? Anyone buying this IPO is just gambling with the odds heavily stacked against them. Also you have to wonder about the sanity of the management of Soft Bank for investing so much money in this real estate scheme.
Bigjoe99 (1 month ago)
If the stock does not fall 80% or more, I will eat my shoes.
babylon.don.204 (1 month ago)
How do I short Wework?
B aa (1 month ago)
Am I missing something? Why are we calling it a "tech company"?!?
YouMan Chew (1 month ago)
I recall a place back in the day where you could have a quiet workspace under a similar model but was free. They called it the public library.
Antonio Santos (1 month ago)
Compass and WeWork tapping into the tech startup narrative for funding but are actually Real Estate companies.
Gerry Peticca (1 month ago)
This company will not be around after our next recession.
andy smith (1 month ago)
Remember the internet bubble!! Shorting the stock post IPO may be a good play!! Make them pitch to shark tank first!!
Papa Khan (1 month ago)
The line between entrepreneur and fraud is very thin.
willinton06 (1 month ago)
This recession will be devastating, like really really devastating, all this companies will go broke and their low profile but actually profitable competitors will devour everything.
Tantrix Spa and Wellness (1 month ago)
Extremly expensive spaces to rent. Definitely they will bankrupt for that reason. They got really high stakes to get big players in these expensive spaces, they got few, but not enough. Another story to tell... too big to fail
starboy hustle (1 month ago)
however u look at wework the CEO became super rich off it wether we works "works" he made it work for him! however its also making it work for others im sure especially when it becomes public its still a brilliant idea! 💡
starboy hustle (1 month ago)
@Papa Khan is that said in a good way?🤔 lol jw
Papa Khan (1 month ago)
WeWork and the founders strongly remind me of Theranos and Elizabeth Holmes.
TheSushiraw (1 month ago)
TESLA doesn't make money either...
Rithvik Gujjula (1 month ago)
2008 - government bails out big banks whenever next recession date - government bails out unprofitable tech startups and unprofitable overvalued non-tech startups like wework, but for no reason
wildreams (1 month ago)
No discussion on coworking?
ADFDGGE (1 month ago)
This is how it will end LYFT will be bought by UBER then UBER will be bought by GOOGLE in the mean time APPLE will buy TESLA and WEWORK. TWITTER will be bought by FACEBOOK and SNAP will be bought by AMAZON, Eventually APPLE will buy FACEBOOK and GOOGLE will buy AMAZON. GOOGLE will buy APPLE in the end.
tyrese smith (1 month ago)
WeScam
Adi (1 month ago)
Investors are investing stupid money.. Lols..
Jeffrey Bozko (1 month ago)
Compagnies like this can only exist in times like thiswhen interest rate is close to 0% lol
Tsablis Thoj (1 month ago)
this guy sounds like a Eddie Lambert scam, buy the thing then turn around and lease it back to the dieing company
Jishu Kalotra (1 month ago)
I am telling you right now, that guy ceo is shady
Balram Limani (1 month ago)
WHO IS dumb enough to buy in the IPO of these loss making start up scams?
Golden Arrow (1 month ago)
I thought Blue Apron mailing out very expensive meal kits was a horrible business model. This is even more ludicrous!
Saleena Son (1 month ago)
I have attended events at a local WeWork space and I will say the whole coworking space concept is very marketable to people who like building community/ work in nonprofit sector. Their spaces are beautiful and the staff was really helpful but I understand how this can get super expensive
TheMamspoker mamp (1 month ago)
The CEO keeps saying they're not a real estate company, which is bull. That is their business model pure and simple: take out long term leases, then sublet the space to others spending billions in the process to fit out the space in their lifestyle brand look and feel.
Music Lover (1 month ago)
Wework is a real estate company why do you think they have huge investments. They is nothing different.
marquiste nichols (2 months ago)
They bought 1 million square feet of office space downtown "chicago"
Josef K (2 months ago)
Too big to fail. Where have I heard this before?
Christopher Armstrong (2 months ago)
Two words: Gig Economy. Is it sustainable? Only time will tell.
James (2 months ago)
You're an idiot if you buy into this company. I'm sorry, but if you can't generate a profit you're asking for trouble.
Jackson Stock (2 months ago)
We ain't gonna be buying that POS
Dan The Travel Man (2 months ago)
It’s similar to Airbnb, large buildings don’t have a central location or capacity to fill up their unused space in an efficient and consistent method.
Ron Montreal (2 months ago)
I interviewed once for a company at a WeWork office. That company lost all credibility to me and I wouldn't work at that place for +50% of what I make now, It took the guy 30 mins to even tell who I was among the other "employees".
Giancarlo Romero (2 months ago)
when broke.. go public
C J (2 months ago)
Elementary School? Hell no, they just want to hide behavior data sensors everywhere like in the wework locations to monitor and harvest data on kids.