Ahead of IPO listing WeWork reveals staggering $900 million in losses

Adam Neumann center co-founder and CEO of WeWork attends the opening bell ceremony at Nasdaq in New York

Investors may be stumped by some of the finances WeWork owner We Company unveiled this week in its filing to go public, in particular a US$486 million gain on a convertible note that made losses at the coworking firm appear a lot smaller.

Neumann has not sold any shares of the company since October 2017 and does not plan to not sell shares in the IPO, We Company said in its filing. Its parent, The We Company, filed a financial prospectus with regulators on Wednesday. Myles Udland and Brian Cheung discuss.

WeWork began by renting office space to freelancers and startups, but a growing part of its customer base are major corporations, which are betting on the model as an efficient way to enter new markets and bring employees closer to clients. But it also lost $689.7 million in that same period.

In the IPO filing, the We Company also laid down the challenges ahead such as how its global re-branding effort in January may affect its ability to attract and retain members, and have a "material adverse effect" on its business or results of operations.

WeWork's IPO filing with the Securities and Exchange Commission provides the most comprehensive financial picture yet of the company co-founded by its chief executive, Adam Neumann, in 2010.

The We Company's CEO, Adam Neumann, has committed to donating at least $1 billion to charity in the next decade, or his control over the shared-workspace group will be nearly halved. The company closed the first half of 2019 with $1.5 billion in sales, up from $763 million the same time a year ago, and posted a $4 billion revenue backlog on top of that.

In 2016, net losses amounted to $429 million, a year later those loses almost doubled to $933 million.

The co-working office space group, which also has accommodation and education arms, has showed in its long-awaited investment prospectus that it made a pre-tax loss of 900 million USA dollars (£745.5 million) in the first six months of the year.

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To get to this dazzling price tag, the New York-based office space provider has presented itself as a nimble-footed Sillicon valley style innovator.

WeWork ($WEWORK) is heading to public markets soon, signaling that what may be the biggest IPO of the fall.

The company's core business is simple.

There's no shortage of investor interest in a WeWork IPO.

The question however, is whether We Company can turn those locations into money makers quickly enough. With 528 locations in 111 cities, co-working space giant WeWork has received valuations that are not of a property company, but that of a technology company.

In the opening to its prospectus, the company describes its mission as "to elevate the world's consciousness".

Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. It has been criticized for being largely backed by the SoftBank Vision Fund, which counts the Public Investment Fund of Saudi Arabia as a major source of capital. The same tone permeates the entirety of the document and serves to convey an office-leasing company as something more than it really is. Neumann will control enough shares to have a majority vote, the company said in its prospectus, giving shareholders little influence over decision-making.

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