Office-sharing company WeWork is reportedly considering slashing its initial valuation to below $20 billion, a price that falls far short of the firm’s private valuation from January.
Drew Pascarella, senior lecturer of finance in the Cornell SC Johnson College of Business, says that WeWork’s underwhelming position points to several shortcomings in the firm’s financing and business model.
“The IPO market took the month of August off after a busy and successful June and July, with almost half of IPOs pricing above the range in that period.
“WeWork’s IPO will give us a post-summer indication of how investors view a cyclical growth investment in the face of macro factors such as China trade.
“Early reporting on WeWork’s valuation seems to indicate a concerned stance on both macro and business model and it points to the lack of discipline late-stage growth equity investors have displayed over the past few years.”