This year is the year of listing publicly it seems as Uber, Lyft and now WeWork are readying for an Initial Public Offering (IPO).
As part of this process, WeWork, now known as We Company, published its IPO prospectus giving potential investors a look behind the curtain.
And that curtain has revealed an alarming fact – We Company is losing money and a lot of it.
In 2016, net losses amounted to $429 million, a year later those loses nearly doubled to $933 million. The worst year by far was 2018 where loses totalled $1.9 billion.
The first half of 2019 appears to be putting We Company on that same path with losses amounting to $904 million in the first six months of this year. During the same period in 2018, losses amounted to $722 million.
Reading further into its prospectus it appears that a large portion of these losses can be attributed to what We Company dubs “build phases”. During these periods the firm is looking for and building out locations and as you can imagine, it’s not making money.
“As we build and open more locations within existing markets, expand to new markets and scale our suite of products and services, we increase the value of our platform to our members and create additional capacity for incremental monetization of our platform,” explained We Company.
The question however, is whether We Company can turn those locations into money makers quickly enough.
As of time of writing We Company operates in 280 cities and has a market penetration of just 0.2 percent.
It’s no secret We Company is changing the mentality behind office space. Having huge office spaces that aren’t your problem when it comes to maintenance, coffee, beer (yes WeWork locations also offer beer on some days) and infrastructure, are rather tempting.
That having been said, for all its talk of using data and analytics to help members “unlock creativity and productivity”, WeWork is, at the end of the day, a co-working space that charges less than other co-working spaces might and we wonder how long that will be a draw, especially once investors are pushing the firm to be profitable.