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Is WeWork on the Cusp of Another IPO?

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In an interview with Reuters published in January, WeWork’s CEO Sandeep Mathrani provided an interesting, if not downright surprising, update on the coworking company.

“My job was to streamline the company and streamline the real estate portfolio so we could go to our path of profitability by Q4 2021,” Mathrani told Reuters. “We are completely on track.” 

That’s right: Mathrani confirmed the company is on track to be profitable by the end of this year. 

Not only have WeWork’s locations in China returned to virtually 90% of their pre-Covid levels from a demand, leasing, and occupancy perspective, but Mathrani reported the company had its best month for membership sales in December of 2020 since the end of 2019. 

In the interview, Mathrani also added that WeWork currently has $3 billion of liquidity on its balance sheet—enough to carry the company through 2022.

A follower of WeWork’s turbulent media cycle may be shocked by these numbers; wasn’t the company just enroute to bankruptcy? After pulling the plug on its ill-fated initial public offering in the fall of 2019, WeWork ousted its controversial founder Adam Neumann and cut its notorious $47 billion valuation to just $2.9 billion.

When Mathrani took over in February of 2020, he rolled out new ways to contain costs, such as laying off roughly 8,000 employees and closing locations in big cities like Washington and New York. 

Though the company’s global income was down from $934 million to $811 million during the pandemic, that’s really not so bad for a company that profits off of in-office work. Even if revenue dropped a little, losses dropped significantlyfrom $1.2 billion in cash burn at the end of 2019 to $517 million in Q3 2020.

Is a SPAC the Best Way Forward for WeWork?

While it’s still too early to say whether WeWork can in fact turn a profit in 2021, The Wall Street Journal reported last month that the coworking giant is still planning to go public, but this time with a SPAC.

Related  Premier Workspaces Looks to Acquire Locations as WeWork Exits Leases Amid Bankruptcy

Special purpose acquisition companies, or SPACs, have become the latest rage on Wall Street as a quicker option to the conventional IPO process.

SPACs not only make it easier for companies to gain access to capital, but they also allow them “to sidestep months of scrutiny from potential investors during an IPO roadshow,” Forbes reports.

According to The Wall Street Journal, WeWork has received offers from at least two SPACs, including a firm tied to Bow Capital Management in California. The SPAC would value the company at $10 billion—a fraction of the estimate that SoftBank drew up in 2019. 

Still, using a SPAC would help WeWork avoid a second attempt at a traditional IPO and put the company on the stock market through a merger instead. 

For WeWork, which has tried to find stability under its new chief executive, a SPAC may finally give the company the exit it always wanted.

In a statement, Lauren Fritts, WeWork’s chief communications officer said, “Over the past year, WeWork has remained focused on executing our plans for achieving profitability. Our significant progress combined with the increased market demand for flexible space, shows positive signs for our business. We will continue to explore opportunities that help us move closer towards our goals.”

If the future of work is all about flexibility, WeWork will at the very least be around to see it alongside other global office space providers such as IWG and Industrious looking to reinvent the nature of workspace.


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