Report: WeWork Is Hemorrhaging Money, to No One’s Surprise
The shared workspace giant just filed to go public, and profits are hard to find
Shared workspace behemoth WeWork, also known as “The We Company,” just filed detailed financials with the Securities and Exchanges Commission, ahead of its plans to go public this December.
For those who need a refresher, WeWork is the most valuable startup in the United States, valued at a preposterous $48 billion. It provides a physical space for small companies, out-of-office employees and gig-economy contractors or freelancers to work a 9-5, often in a lounge dotted with potted palms, nice lighting fixtures and enviable snack selection.
According to The Wall Street Journal, WeWork isn’t doing so hot. While the company has steadily increased its revenue each year— $436 million in 2016, $886 million in 2017, and $1.8 billion in 2018 (all huge numbers, considering the company was only founded in 2010) — its aggressive expansion efforts has come with some serious losses. For 2016, 2017 and 2018, WeWork lost $429 million, $883 million and $1.6 billion, respectively.
Those are some slim profit margins. And it’s probably even worse than that. As Gizmodo points out, WeWork uses an accounting tactic called “community adjusted EBIDTA,” which means they’re subtracting an array of costs, from marketing expenses to administrative costs, from their losses. The philosophy being that those sorts of costs are overhead expenses that will ultimately generate more revenue for WeWork, and shouldn’t be stressed over too much.
Why is WeWork losing all that money? Tough to say, but its management at the top has been puzzling. CEO Adam Neumann has already cashed out to the tune of $700 million, and spent $80 million of that on real estate (four properties in the New York area, and a $21 million home in The Bay). Which is a bit … unusual. Especially as WeWork is actively looking for debt financing up to $4 billion ahead of its IPO.
Also revealed in all this — WeWork doesn’t have a single female director. For a nine-year-old company, that is absolutely mystifying. Every single other S&P 500 company has at least one woman on their board. Memberships may have doubled in the last year (Instagrammability probably played a role), but The We Company clearly has some work to do.
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