WeWork's value plunged more than 80% to below $5 billion last quarter, SoftBank says. Here's why that's a staggering drop

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WeWork cofounder and former CEO Adam Neumann

• SoftBank slashed its pre-bailout valuation of WeWork by more than 80% to below $5 billion last quarter.
• The humbling price tag represents a dizzying drop from WeWork's $47 billion valuation in January, and values the coworking startup at nearly the same amount as five years ago.
• The valuation also suggests WeWork is worth less than H&R Block and Macy's, cofounder and former CEO Adam Neumann cashed out the equivalent of 14% of his company's total worth, and WeWork's property and equipment might be worth more than the entire business.
• Read more of Business Insider's WeWork coverage here.

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SoftBank slashed its valuation of WeWork - before its $9.5 billion rescue deal - by more than 80% to below $5 billion last quarter. The humbling price tag for the coworking startup is staggering for several reasons.

It's a dizzying drop in a matter of months

WeWork raised $1 billion from SoftBank and other investors in a private fundraising in January, valuing the shared-workspace group at an eye-watering $47 billion.

SoftBank's latest valuation of $4.9 billion as of September 30 suggests WeWork's value has plunged by almost 90% in nine months (the Japanese conglomerate's headline valuation of $7.8 billion includes two parts of the bailout agreement it struck with WeWork last month).

WeWork hasn't grown in value in five years - or it was already overvalued in 2014

WeWork, founded in 2010, secured a private valuation of $4.6 billion in October 2014, according to Crunchbase. SoftBank's $4.9 billion valuation implies WeWork wiped out nearly all the value it created over the past five years - or it was massively overvalued five years ago.

WeWork was valued higher than FedEx, but now it's worth less than H&R Block

WeWork's $47 billion price tag in January valued it more highly than FedEx and Ford, which have market capitalizations of about $42 billion and $35 billion respectively. It also put it within touching distance of Walgreens Boots Alliance's $50 billion market cap.

The coworking startup's decimated valuation of $4.9 billion suggests that before SoftBank's bailout, it was worth less than H&R Block and Macy's, which both have market caps of about $5 billion.

Adam Neumann cashed out the equivalent of 14% of WeWork's value

WeWork's cofounder and former CEO Adam Neumann cashed out more than $700 million by selling and borrowing against his company's stock - equivalent to 14% of SoftBank's new, pre-bailout valuation.

Neumann and his wife Rebekah also pledged to give $1 billion to charity over the next decade, or more than a fifth of their company's entire worth by SoftBank's estimate.

WeWork's property and equipment could be worth more than the whole company

In its IPO filing, WeWork reported having $6.7 billion worth of property and equipment as of June 30. The figure suggests its workspaces, furniture, computers, and other physical assets were worth significantly more than the entire business at the end of September, using SoftBank's pre-bailout valuation.

WeWork also reported $4 billion in committed revenue and about $2.5 billion in cash and liquid assets, but SoftBank's lower valuation suggests the startup's $47 billion in lease commitments and rapid rate of cash burn far outweigh those positives.

It's possible SoftBank is being too conservative and WeWork is worth more than $4.9 billion. However, that valuation still represents almost a 50% premium to the $3.3 billion in revenue WeWork was on track to earn this year as of June.