Perhaps the least known of the ‘unicorn’ companies now fighting for dominance on the stock market, Silicon Valley start-up WeWork is the latest to value its company in the billions, leaving many to wonder if the company is aiming too high for its debut.
Silicon Valley Giants
Reports published recently have valued the company, which provides trendy office spaces for tech start-ups, freelancers and entrepreneurs across the United States, at around $46bn.
This firmly places them within the realms of other Silicon Valley hubs heading for the stock market, including ride-sharing apps Uber and Lyft and lifestyle website Pinterest.
WeWork’s journey to the stock market sees them joining a crowded group of high-risk, low-return companies valued over billions of dollars all trying to increase revenue streams by selling shares.
These high valuations are based on the idea that their inclusion will shake up markets and ultimately, give big rewards in return.
But the company, which presents ‘millennial-friendly’ office spaces that try to appeal to tech start-ups and younger individuals, has presented several issues to experts. Namely, why their valuation is so high when their service is, essentially, a spin on the classic real estate agency.
Established in 2010, WeWork is a relatively new addition to the Silicon Valley tech boom and now works in 100 cities across the United States. They’ve also begun to branch out into other markets: WeLive offers fully furnished residential space for people to rent, while WeGrow is an own-brand school for 2-11-year-olds.
But while the company is growing and expanding, it’s also losing huge amounts of money – in 2018, they reported an operating profit of -£1.5bn.
Unlike their app-counterparts, WeWork requires huge amounts of capital to keep themselves afloat, which is already beginning to concern potential investors looking to get involved in this volatile market.
However, investors are increasingly nervous about signing onto WeWork.
The company currently only operates through the United States, where its counterparts are increasingly global, with plans to expand further into new countries and markets.
Nevertheless, the company already has some very high-profile backers investing in WeWork, including Goldman Sachs, JPMorgan and Japanese tech conglomerate Softbank.