On Thursday of last week, WeWork shares rose on their first day of trading, capping a long journey to a listing that included the implosion of its initial public offering in 2019 and the ouster of its co-founder and chief executive, Adam Neumann, WSJ reports.
The flexible office giant went public through a merger with New York-based real estate company BowX Acquisition Corp., a special-purpose acquisition company (SPAC). At day’s end, WeWork shares closed 13.5% higher at $11.78 under the ticker “WE” on the New York Stock Exchange.
“Today is a testament to the determination of our company to not only transform our business, but also to adapt and deliver the options that today’s workforce demands,” said WeWork CEO Sandeep Mathrani in a statement released Thursday.
Plans for the merger with BowX were first announced in March of this year in a deal that reportedly valued the company at roughly $9 billion, CNBC reports. This valuation is a sharp drop from 2019, when WeWork was valued at an astonishing $47 billion by SoftBank Group.
“You’ve said this is a story with drama,” WeWork Executive Chairman Marcelo Claure told CNBC’s “Squawk Box” on Thursday. “Sure, this is a story where a lot of people wrote documentaries that it was the end of WeWork. Well the resistance, the persistence of these people is incredible. This company is here, is stronger than ever, and no doubt that we’re going to be celebrating many more milestones.”
As part of the deal, SoftBank retains a majority stake in the company led by Mathrani, who has made it a priority to streamline WeWork’s real estate portfolio and stabilize its track to profitability.
With experts predicting that the flexible office market, which currently accounts for just 2% of office inventory in the United States, could reach 10% by the end of the decade, the pandemic has created a space for operators like WeWork and IWG to thrive. As workers trickle back into offices, companies will likely favor signing one- or two-year contracts with operators like WeWork rather than locking in long leases, CNN Business reports.
“The advantage of a SPAC offering is it allows WeWork the ability to make bullish forward-thinking growth projects that would not be allowed under traditional IPO regulations,” Mathrani told Julia Horowtiz of CNN Business.
