WeWork shelved its IPO at the last minute due to a lack of investor interest.
Investors balked at the shared workspace group's business model, valuation, complex structure, questionable governance, and controversial cofounder and CEO Adam Neumann.
WeWork signs long-term leases for properties, divides them up and renovates them, then rents them out on a flexible, short-term basis. Investors questioned whether that strategy would hold up during a downturn if tenants moved out or demanded cheaper rents to stay.
Just before its IPO, WeWork was targeting a public valuation below $20 billion — less than half the $47 billion it was privately valued at in January. Another factor in its decision to delay was the risk of raising less than $3 billion, the amount needed to unlock $6 billion in bank financing.
WeWork's IPO filing showed Neumann commanded the lion's share of its voting rights, giving him almost total control of the company. It also revealed Neumann employed and gave paid gigs to immediate family members, charged WeWork nearly $6 million for the rights to the "We" name, and held stakes in companies leasing four buildings to WeWork, raising conflict of interest concerns.
Neumann's reportedly raised $700 million by selling and borrowing against his WeWork shares, allegedly smoked weed on a private-jet flight from New York to Israel, and has behaved in other questionable ways that tempered investor interest.
The company recently replaced Neumann with two co-CEOs, reduced his control of the company, and took other steps to improve its corporate governance.