WeWork, a real estate firm that leases shared office space, on Wednesday officially set in motion the process of becoming a publicly traded company by filing a financial prospectus with regulators.
The offering by the company, which is led by a brash Israeli entrepreneur and backed by money from Saudi Arabia, will be a major test of investors’ appetite for fast-growing but unprofitable start-ups after similar moves this year by the ride-hailing rivals Uber and Lyft proved to be disappointments.
WeWork, which is valued at nearly $50 billion as a private company, faces sharp questions about its business model. It lost more than $1.6 billion last year on just $1.8 billion in revenue, according to the prospectus. By comparison, Uber lost $1.8 billion last year on revenue of $11.3 billion. WeWork’s losses accelerated in the first half of 2019, although its revenue more than doubled, the filing shows.
The company’s core business is simple: It takes out long-term leases on commercial real estate, spiffs up the spaces with amenities like fashionable furniture and free beer and then rents out individual offices and larger suites to other companies.
WeWork said in its filing that it has more than 604,000 workstations, or desks, around the world, and more than 527,000 “members,” the company’s term for people with access to those desks. Both figures were roughly double what they were a year ago. WeWork also said that its sales were growing quickly, and that it expected them to total $3.3 billion this year.
But the company’s capital-intensive business and breakneck growth have made profitability elusive. WeWork lost almost $900 million in 2017, and more than $400 million in 2016, the filing shows.