Workspace rental company WeWork filed its highly-awaited initial public offering (IPO) prospectus on Wednesday, revealing the costly impact of its rapid global expansion.
The company, which is expected to go public as soon as next month, is reportedly hoping to raise between US$3bn and US$4bn through its float – making it one the biggest new listings this year.
The prospectus showed WeWork made a net loss of US$905mln in the first six months of this year, compared to US$723mln, with US$215mln of its loss attributable to other investors who have funded its growth in Asia.
Revenue, however, doubled to US$1.54bn and members rose 90% to 527,000.
"Our membership base has grown by over 100% every year since 2014," the company said.
"It took us more than seven years to achieve US$1bn of run-rate revenue, but only one additional year to reach US$2bn of run-rate revenue and just six months to reach US$3bn of run-rate revenue.”
WeWork's parent company, The We Company, filed confidentially for an IPO in April.
The business was recently valued at US$47bn by Japanese telecoms and tech firm Softbank, WeWork's biggest backer which invested an extra US$2bn in the firm in January. But the company is unlikely to fetch that same valuation when it lists.
It plans to use the proceeds of the IPO to fund its global expansion. WeWork had 528 locations at the end of June, up from 485 at the end of the first quarter of 2019, and plans to open 169 new locations.
Burning through cash
WeWork rents out co-working spaces to start-ups, freelancers and companies. The firm has ploughed vast sums of cash in expensive markets with the aim of making it back over time as customers pay their rent.
Long-term lease obligations stood at US$17.9bn, according to the filing.
Neil Wilson, chief market anlayst at Markets.com, said: "It burns through boats loads of cash, no one knows if it will ever make money and it’s going to be snapped up by millennials with their Robin Hood accounts – WeWork is perfect IPO material in 2019.
"The last funding round valued the company around $47bn, but this looks lofty. 2019 has been hit-and-miss for unicorn IPOs – WeWork may find it tough going. There is a major whiff of the ‘they’re not losses but investments’ nonsense."