WeWork’s IPO Doesn’t Work Yet

Well, but, what changes in a month? The We Co., the parent company of WeWork, filed to go public last month, and it has been ruthlessly and continuously mocked ever since, and yesterday it apparently decided to postpone its initial public offering “until at least October,” and issued a passive-aggressive statement saying that it is “looking forward to our upcoming IPO, which we expect to be completed by the end of the year.” Like everyone else I participated in the mockery, and now I feel a little bad about it. Come back WeWork, we were only kidding! I mean, I was just having some fun, but it is not my money. Presumably WeWork’s main reason for postponing the IPO is that investors were not all that jazzed to buy shares at a valuation WeWork (or its big early investors) could stomach. Presumably they weren’t kidding.

But if you don’t like WeWork now, why would you like it in October, or December? I suggested recently that delaying the IPO could be a (more or less accidental) way for WeWork to demonstrate that its business model actually works: If its growth slows (because it can’t raise money from the IPO to plow into new locations), it will automatically become profitable as existing locations mature and prove the attractive unit economics of its underlying business. Or that’s the idea anyway. And then when it returns to the market it can say to doubters “see, we told you that this thing will make money in the long term.” But I didn’t mean October. If the IPO happens by the end of the year, it will be with at most one extra quarter of financial results (the quarter ending in two weeks), which seems unlikely to change anyone’s mind about the long-term viability of the business model.