Some people just can’t take a hint.
Roughly a year and a half after the office-leasing company WeWork made its push to go public via an IPO, the company announced on Friday it’s going to make another run at it. But this time, through a special acquisition company, BowX Acquisition Corp. (BOWX)
SPACs have become quite the hot trend over the last several months, so it’s no surprise WeWork would seek this avenue to public trading. But with the company’s history and the current state of office demand, is it the right move?
In late 2019, WeWork’s IPO bid fell flat on its face, as Adam Neueman resigned as chairman and chief executive, WeWork was forced to close many locations and slash its workforce as the COVID-19 pandemic sapped demand for office space. The company’s valuation now sits at a pedestrian $9 billion compared to $47 billion back in 2019.
WeWork’s new CEO, Sandeep Mathrani joined the team February of 2020, and had a front-row seat to the company’s worst year ever, which finished the year losing $3.8 billion. Additionally, by the end of last year, occupancy of WeWork offices was down to 46%, compared to 72% in 2019, according to the Wall Street Journal.
Despite the fact that Mathrani believes WeWork is on track to become profitable by the end of 2021 after laying off more than 8,000 people and selling off software businesses like Teem and Flatiron School, it’s tough to get on board with the company’s business model, especially in this climate as so many offices are buying into remote work.
Add that with the idea that WeWork has to rely on a SPAC to rebuild the company’s credibility as a viable option for your portfolio, and it’s even more difficult to find a solid argument for the company.
Stanford business professor Michael Klausner, told the New York Times:
“There have been doubts raised about [WeWork’s] business model, and those doubts may be difficult to address in an IPO roadshow,”