WeWork's stock has plunged nearly 99% since it IPO'd, and the company has warned it may not even stay in business.
👉 Background: WeWork launched in 2010 with its charismatic founder, Adam Neumann, promising that the future is all about "we". Over the period of 9 years, it raised over $22 billion USD, including a valuation of $47 billion USD.
👉 What happened: It all came crashing down when Neumann tried to IPO WeWork in 2019, because the prospectus led to a LOT of questions. But once WeWork got rid of its founder, it did actually end up IPOing via a SPAC back in 2021... at a more modest valuation of $9 billion USD.
👉 What else: Now, WeWork's stock has plunged nearly 99% since it IPO'd. And, the company has warned it may not even stay in business. And just this morning, it leaped 150% in a meme-stock rally.
💡The higher a company's valuation rises, the bigger it can fall. While it's tempting for startups to aim for high valuations, WeWork's trajectory shows the potential pitfalls.
💡WeWork was marketed as a revolutionary company, but really, it's a glorified property manager. And all this hype and attention eventually led to intense scrutiny.
💡Once skepticism begins, it can lead to a rapid loss of investor confidence. And they can find it challenging to raise additional capital in the future.
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