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Wednesday, February 12, 2025

Is WeWork’s New Stock-Listing Plan Just a Blast from the Past?

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By Benyamin Davidsons

WeWork, which suffered one of the most embarrassing Initial Public Offering failures in recent years, is ready to try going public again.

As reported by the Wall Street Journal, the office-sharing giant wants to go public by merging with a special-purpose acquisition company (SPAC).  While the company will not try another IPO, some critics are worried it might still be too similar to the first deal they tried.  SPACs raise money in an IPO, and then merge with startups which are dreaming of going public.  Many of the private companies targeted have modest revenues, no profits, and use hyped up forecasts to sell their deals, making SPACs the most common route to go public.  SPACs accounted for 75 percent of all IPOs from January through March.  The regulations surrounding SPACs are less rigid than they are for IPOs, so WeWork will have more room to build up its own attributes.

As per the WSJ, later on this year, WeWork is expected to merge with a SPAC named BowX Acquisition Corp.  The two companies painted a very bright picture of the company’s projected growth and profitability.  In a call with potential investors, BowX’s chairman, Vivek Ranadivé, described WeWork as a $5 billion revenue company, based on a projection for the future. The pitch describes the company as a “massive growth opportunity,” with “850+ locations,” more than a million workstations and over 450,000 memberships. Those totals include WeWork’s China and India operations, which aren’t owned by the company, as admitted in the fine print of the slides presented.

The recent investor presentation by BowX has “echoes of the company’s approach in 2019,” said Minor Myers, a law professor at the University of Connecticut who specializes in corporate finance. “The SEC could push back hard again,” he said, if WeWork doesn’t scale back its overly optimistic claims in its official filings expected to be filed with regulators later in April.

WeWork’s proposed deal, which values it at $9 billion including debt, will be voted on by BowX shareholders later on in 2021. Trading volume in BowX’s stock has surged 100 times since the day the deal was announced on March 26.  The stock price is also up to about $11.81, as of the close on Monday, up over 13 percent since the announcement.

A WeWork spokeswoman said the company “will always work with the SEC to ensure our disclosures comply with their requirements.” An SEC spokesman declined to comment. BowX didn’t respond to requests for comment by the WSJ.

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