WeWork shelves £37.6bn IPO plans in latest sign new tech bubble may be deflating

Flexible office provider WeWork has been forced to shelve its much-hyped stock market listing after receiving a cool reception from investors.

Once said to be chasing a $47bn (£37.6bn) valuation, WeWork has struggled to drum up interest at $15bn (£12bn) to $20bn (£16bn), which many analysts believe is still too high for a company that loses two dollars for every one it brings in in revenue.

Timing has also been a problem for WeWork, which is seeking to raise $3bn to $4bn through a listing after a string of loss-making tech firms have seen their shares tank following high profile initial public offerings (IPOs).

“The We Co. is looking forward to our upcoming IPO, which we expect to be completed by the end of the year,” WeWork’s parent, the We Company, said in a statement on Monday evening in New York. 

“We want to thank all of our employees, members and partners for their ongoing commitment.”

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Irish Prime Minister Leo Varadkar and British Prime Minister Boris Johnson at Thornton Manor. Their meeting focused on further Brexit proposals

EPA/Noel Mullen

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Protesters dressed as the Incredible Hulk and Robocop outside the Supreme Court in London where judges are due to consider legal challenges to Prime Minister Boris Johnson’s decision to suspend Parliament. The Supreme Court will hear appeals over three days from two separate challenges to the prorogation of Parliament brought in England and Scotland

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First Minister Nicola Sturgeon cuts the hair of David Torrance MSP raising £1000 for the charity Maggie’s Centre in Kirkcaldy at the Scottish Parliament in Edinburgh

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38/50 3 September 2019

Anti Brexit demonstrators attend a protest at Parliament Square. Lawmakers returned from their summer recess Tuesday for a pivotal day in British politics as they challenged Prime Minister Boris Johnson’s insistence that the UK leave the European Union on 31 October, even without a withdrawal agreement to cushion the economic blow

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Members of the Royal Southern Yacht Club and the Island Sailing Club take part during the annual cricket match between the clubs, which takes place on the Bramble Bank sandbank in the middle of the Solent at low tide

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41/50 31 August 2019

Anti-Brexit protesters demonstrate at Whitehall in London

SWNS

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43/50 29 August 2019

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45/50 27 August 2019

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Labour Leader Jeremy Corbyn and Shadow DEFRA Secretary Sue Hayman during a visit to Rakefoot Farm, Castlerigg, Keswick where they are highlighting the danger of a No Deal Brexit to sheep farmers

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1/50 10 October 2019

Irish Prime Minister Leo Varadkar and British Prime Minister Boris Johnson at Thornton Manor. Their meeting focused on further Brexit proposals

EPA/Noel Mullen

2/50 9 October 2019

Wales survived an almighty scare against Fiji to secure quarter-final spot at the rugby world cup. Warren Gatland’s side recovered from a 10-0 deficit thanks to a hat-trick from Josh Adams

AFP/Getty

3/50 8 October 2019

Protesters dubbed the Red Rebels at Millbank at the junction with Great College Street, during an Extinction Rebellion protest in Westminster

PA

4/50 7 October 2019

Final preparations are made in front of a reproduction of Michelangelo’s ‘The Last Judgement’, ahead of the opening of for the ‘Michelangelo: A Different View’ exhibition at Hull Minister

PA

5/50 6 October 2019

A car drives through a flooded street in Whitley Bay in Northumberland

PA

6/50 5 October 2019

Thousands took to the streets of Edinburgh today to march in support of a second Scottish independence referendum

EPA

7/50 4 October 2019

A 12ft sculpture of a gorilla, entitled ‘Gorilla Apocalypse’, created by Luke Kite entirely from scrap car bumpers and panels discarded in the last decade is on display at the British Ironwork Centre in Oswestry, Shropshire

PA

8/50 3 October 2019

Police stands in front of the Treasury building during an Extinction Rebellion protest in London

Reuters

9/50 2 October 2019

Ex-Thomas Cook employees demonstrate in London after delivering a petition calling for a full inquiry into Thomas Cook’s collapse and for the company’s directors to pay back their bonuses

AFP/Getty

10/50 1 October 2019

A road in Alum Rock, Birmingham is flooded after persistent heavy rain

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11/50 30 September 2019

Two tourists pose for pictures in front of Union and EU flags outside the Houses of Parliament in London

PA

12/50 29 September 2019

A sheep on London Bridge as Freemen of the City of London took up their historic entitlement to drive sheep over the bridge, which was once London’s only river crossing

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13/50 28 September 2019

An Aldabra giant tortoise is fed watermelon as a treat at the Malvern Autumn Show, at the Three Counties Showground near Malvern in Worcestershire

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14/50 27 September 2019

Gallery assistants pose with an artwork entitled ‘Devolved Parliament’ by British artist Banksy, during a press view in London ahead of Sotheby’s contemporary art sale, as part of the Frieze Art Fair

AFP/Getty

15/50 26 September 2019

England’s Jonathan Joseph is tackled by United State’s Marcel Brache during their group match at the Rugby World Cup in Japan. England scored seven tries on their way to winning 45-7

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16/50 25 September 2019

Tributes for former Rangers player Fernando Ricksen at Ibrox Stadium. Today, the funeral procession will pass Ibrox Stadium before making the journey to Wellington Church

PA

17/50 24 September 2019

A person dressed as a caricature of Prime Minister Boris Johnson in a prison uniform stands outside the Supreme Court after it ruled that his decision to suspend Parliament was illegal

AFP/Getty

18/50 23 September 2019

Thomas Cook aircraft are parked up at Manchester Airport on the day they collapsed after rescue talks failed. A total of 22,000 jobs — including 9,000 in UK — are to be lost following administration. More than 150,000 British holidaymakers need to be brought home, with the government and CAA hiring dozens of charter planes to fly customers home free of charge

Getty

19/50 22 September 2019

Fire performer Penella Bee performs before people take part in the North East Skinny Dip at Druridge Bay in Nothumberland, an annual event that marks the Autumn Equinox and raises money for MIND — the Mental Health Charity

PA

20/50 21 September 2019

Protesters gather for a march and rally organised by «The People’s Vote» in Brighton, to call for politicians to give the public a final say referendum on Brexit

AFP/Getty

21/50 20 September 2019

Protesters in London joined millions across world to demand urgent action to save planet in the largest environmental protest in history

Angela Christofilou/The Independent

22/50 19 September 2019

Rapper Dave poses with the Mercury Prize: Albums of the Year Award at Apollo

Getty

23/50 18 September 2019

A surfer in action during sunrise at Tynemouth on the north east coast

PA

24/50 17 September 2019

Protesters dressed as the Incredible Hulk and Robocop outside the Supreme Court in London where judges are due to consider legal challenges to Prime Minister Boris Johnson’s decision to suspend Parliament. The Supreme Court will hear appeals over three days from two separate challenges to the prorogation of Parliament brought in England and Scotland

PA

25/50 16 September 2019

Farmer Tom Hoggard harvests pumpkins at Howe Bridge Farm in Yorkshire, ahead of Halloween

PA

26/50 15 September 2019

Team Europe celebrate winning the Solheim Cup at Gleneagles in Auchterarder, Scotland. Europe won the last three singles matches to claim victory 14½-13½

Getty

27/50 14 September 2019

Sunset at St Mary’s Lighthouse in Whitley Bay

PA

28/50 13 September 2019

Activists from PETA stage a demonstration outside a venue during London Fashion Week in London, Britain

Reuters

29/50 12 September 2019

Australia’s Marnus Labuschagne attempts to stop a boundary in the fifth Test

Action Images via Reuters

30/50 11 September 2019

Storm clouds gather over the pier just off the North East coast at South Shields

PA

31/50 10 September 2019

The peloton rides past the Angel of the North during stage four of the Tour of Britain from Gateshead to Kendal

PA

32/50 9 September 2019

A penny farthing cyclist rides past St. John’s, Smith Square, Westminster, London

PA

33/50 8 September 2019

Australia celebrate the wicket of England’s Craig Overton, which meant they won the fourth test and retained the Ashes

Action Images via Reuters

34/50 7 September 2019

Manchester City celebrate after Caroline Weir scored during their Women’s Super League match against Manchester United at Etihad Stadium. The WSL attendance record was smashed with 31,213 people watching the first Manchester derby of Women’s Super League era – nearly six times the previous WSL record

Getty

35/50 6 September 2019

A bull bumps into a plain clothes police officer (left) while being walked by Prime Minister Boris Johnson during his visit to Darnford Farm in Banchory near Aberdeen. It coincided with the publication of Lord Bew’s review and an announcement of extra funding for Scottish farmers

PA

36/50 5 September 2019

First Minister Nicola Sturgeon cuts the hair of David Torrance MSP raising £1000 for the charity Maggie’s Centre in Kirkcaldy at the Scottish Parliament in Edinburgh

PA

37/50 4 September 2019

Australia’s David Warner looks dejected after being dismissed by England’s Stuart Broad during day one of the fourth Ashes Test at Old Trafford in Manchester

Getty

38/50 3 September 2019

Anti Brexit demonstrators attend a protest at Parliament Square. Lawmakers returned from their summer recess Tuesday for a pivotal day in British politics as they challenged Prime Minister Boris Johnson’s insistence that the UK leave the European Union on 31 October, even without a withdrawal agreement to cushion the economic blow

AP

39/50 2 September 2019

Set building begins on Waterloo Place in Edinburgh ahead of filming for Fast and Furious 9

PA

40/50 1 September 2019

Members of the Royal Southern Yacht Club and the Island Sailing Club take part during the annual cricket match between the clubs, which takes place on the Bramble Bank sandbank in the middle of the Solent at low tide

PA

41/50 31 August 2019

Anti-Brexit protesters demonstrate at Whitehall in London

SWNS

42/50 30 August 2019

One of the iconic ‘Girl with Balloon’ artworks by anonymous street artist Banksy is carried near one of the original locations the artwork appeared at on the Southbank in London

AP

43/50 29 August 2019

The sun rises over the sculpture «The Couple» by artist Sean Henry, at Newbiggin-by-the-sea in Northumberland

PA

44/50 28 August 2019

A person wearing a Boris Johnson ‘head’ digs a grave at the foot of a tombstone during a protest organised by Avaaz and Best for Britain, outside Downing Street in London

PA

45/50 27 August 2019

Nat Lofthouse statue is covered in flags at the University of Bolton Stadium, Bolton

Action Images via Reuters

46/50 26 August 2019

Performers take part in Notting Hill Carnival. Nearly one million people were expected to attend Sunday and Monday’s carnival to celebrate Caribbean culture

AFP/Getty

47/50 25 August 2019

A competitor swims in the World Bog Snorkelling Championships in Llanwryd Wells, Powys

Reuters

48/50 24 August 2019

People flock to Bournemouth beach as a heatwave spells potentially record high temperatures for the bank holiday weekend

PA

49/50 23 August 2019

Fans of Bury FC deliver a symbolic coffin to the club’s home at Gigg Lane as the continuation of their membership to the football league lies in doubt. The club will lose their membership at midnight if they don’t find a buyer or prove that they have the means to pay off their debts

PA

50/50 22 August 2019

Labour Leader Jeremy Corbyn and Shadow DEFRA Secretary Sue Hayman during a visit to Rakefoot Farm, Castlerigg, Keswick where they are highlighting the danger of a No Deal Brexit to sheep farmers

PA

The value of WeWork’s bonds dropped sharply after the news, suggesting that investors have less faith that the company will be able to service its debts. 

WeWork’s biggest backer, Japanese conglomerate SoftBank, recently called on the company to postpone its listing plans.

A listing at below a $47bn valuation would have exposed the full extent to which SoftBank overpaid when it purchased a stake at that price in January.

SoftBank and its $100bn (£80bn) Vision Fund, which is backed by Saudi Arabia’s sovereign wealth fund, have so far invested or committed to invest $10.7bn (£8.5bn) in WeWork.

Yet on Friday, Reuters reported that WeWork insiders were now considering valuing the whole company at $10bn (£8bn).

The dramatic price cut indicates how desperate founder Adam Neumann is to get the sale moving and bring in some cash. 

It will do little to inspire confidence among Wall Street investors who have become wary about overpriced technology firms this year.

Anyone who bought Uber shares when they listed in May will have lost about a fifth of their investment if they sold them today. Rival taxi app Lyft, which floated in March, is about 40 per cent down.

Beyond tech stocks, SmileDirectClub, which sells alternatives to orthodontic braces, managed to raise $1.35bn (£1bn) from investors before its shares plummeted 28 per cent in their first day’s trading last week.

WeWork has been criticised in some quarters as an extreme example of hype over substance, having already racked up losses in excess of $3bn (£2.4bn) while spending freely on expansion. The firm leases offices on long-term contracts before renting them out on short-term contracts to companies and freelancers.

That leaves it potentially vulnerable in a downturn when its customers seek to cut costs by ending their tenancy. Despite the simple business model, WeWork markets itself as a technology company that is changing the way people work and has attempted to value itself accordingly.

Michael Hewson, chief market analyst at CMC Markets, summed up a widely held view: “It would appear that WeWork has missed the boat when it comes to getting investors to buy into an idea that has yet to prove profitable.

”With the company losing $2 for every $1 it makes, even a valuation as low as $15bn (£12bn) and $18bn (£14.4bn) hasn’t been enough to whet investor appetite, particularly since a number of this year’s unicorns are now languishing below their IPO launch prices.

“As Uber can attest, a popular business model doesn’t always translate into a realistic valuation and looking at WeWork’s numbers it is hard to make a case for the type of valuation being asked for now, let alone the one we saw at the beginning of the year.”