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WeWork's troubled market debut is delayed

Credit: Reuters Studio
Published on September 17, 2019 - Duration: 01:56s

WeWork's troubled market debut is delayed

WeWork owner The We Company said on Monday it’s walked away from preparations for an IPO this month, which comes amid concerns it could get snubbed by investors.

Instead, the office-sharing startup is expected to hit Wall Street by the end of the year.

Michelle Hennessy reports.

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WeWork's troubled market debut is delayed

WeWork's parent company has made a last minute decision to pull its expected IPO this month.

The We Company on Monday (September 16), said investors can instead expect a big debut on Wall Street by the end of this year.

Sources told Reuters the delay comes amid worries that its IPO would be snubbed by investors.

There's been growing concerns about the office-sharing startup, with its business model that relies on a dangerous mix of long-term liabilities, and short-term revenue.

Reuters previously reported it was looking for a valuation as low as 10 billion dollars in the listing.

That's a dramatic discount from the 47 billion valuation it achieved in January.

That difference could signal a massive turning point in the growth of the venture capital industry, and changing investors' appetites for young, unprofitable businesses.

U.S. unicorns that have gone public like Uber and Snap Inc - have become big household names - but are still struggling to turn a profit.

Had the IPO gone ahead as expected, a lower WeWork valuation would also have meant a blow to SoftBank - at a time when it too is seeking funds from investors.

SoftBank is WeWork's largest investor and it's trying to launch its second, massive fund to make more big bets in the tech world.

But returns for SoftBank's first Vision Fund have already been hit by lackluster listings from Uber and Slack.

Sources say it's chief Masayoshi Son and the rest of the Japanese conglomerate had been pushing for a delay to the WeWork IPO.

The New York startup now has an extra few months to turn things around and lure in enough investor interest to fund its operations.

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