Shares in WeWork jumped on Thursday as the company made its long-awaited public market debut at the New York Stock Exchange, while across town company co-founder Adam Neumann partied with early employees and celebrated a $1bn windfall from the listing.
The shared office space group’s stock was up more than 10 per cent in early trading as investors piled in, anticipating that the consistently money-losing enterprise will benefit after the pandemic by a shift to more flexible working patterns. About two hours after the market opened, the stock was trading 10.3 per cent higher at $11.45.
The listing drew a line under WeWork’s lengthy, chequered journey to have its shares publicly traded. It gave early employees and private market investors their first chance to sell stock in the company, which opened its first office in 2010.
It also will enrich Neumann, who resigned as chief executive under pressure in 2019 following the collapse of the company’s first attempt to go public at a $47bn valuation.
Neumann retains a roughly 11 per cent shareholding now worth more than $1bn, though he cannot sell shares for nine months and “is not a seller”, according to a person familiar with the matter.
As the stock started trading on Thursday after a merger with a listed special purpose acquisition company, its price gave WeWork a market capitalisation of more than $9bn.
Neumann and co-founder Miguel McKelvey hosted a party with dozens of early WeWork employees to celebrate the listing at the Standard Hotel in Manhattan’s Meatpacking District. Neumann, dressed in a T-shirt with the slogan “Student for Life” written on it, told attendees that he had learnt “hard lessons” but was “excited for the future”.
Guests at the event reprised features of the company’s party-heavy early days, with one chanting “We” and Neumann and his former colleagues shouting back “Work!”
The party was a show of support from Neumann, whose departure from WeWork was followed by a bitter legal battle with the Japanese investment group SoftBank, its largest investor, which had injected more than $10bn into the company. Neumann settled with SoftBank earlier this year, striking a deal which gave him cash, stock awards and fees worth almost $450m.
That deal also included a provision for “profits interest” worth about $250m for Neumann if WeWork’s stock traded above $10 a share, which was unlocked on Thursday. Neumann previously sold $578m of WeWork shares to SoftBank.
WeWork has racked up losses of more than $6bn in the 18 months to the middle of this year. The company’s offices were left empty when the pandemic struck and it took a hit for a painful reconstitution of the business after the aborted initial public offering attempt in 2019.
WeWork came perilously close to running out of cash after the listing attempt failed, necessitating the rescue by SoftBank.
The company has been slashing costs under new chief executive Sandeep Mathrani and is aiming for profitability next year, having removed almost $2bn of annual costs by paring back lease commitments and administrative expenses.
“Next year we will be profitable. There’s no way not to be profitable,” said a person close to the company.
WeWork’s failure to turn a profit has prompted some analysts to question why it commands a valuation which is roughly double that of rival co-working company IWG, which has more offices, more desks and was consistently profitable before the pandemic.
Elsewhere around the world, occupants in WeWork offices were invited to “ring the bell together!” in celebration of the company’s listing. But the mood inside one office in King’s Cross, London, was less ecstatic than that at the NYSE or the Standard Hotel: a bowl of sweets and soft drinks were left untouched as bemused workers stayed away, according to a person based at the building.