Back
~
1
min read
· Posted on
February 21, 2024

WeWork's share price crashes harder than the office wi-fi... but trust the meme-stockers to bring it back

WeWork's stock has plunged nearly 99% since it IPO'd, and the company has warned it may not even stay in business.

What's the key learning?

  • When Neumann tried to IPO WeWork in 2019, the prospectus led to a LOT of questions.
  • While it's tempting for startups to aim for high valuations, WeWork's trajectory shows the potential pitfalls.
  • Once skepticism begins, it can lead to a rapid loss of investor confidence.

👉 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.

What's the key learning?

💡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.

Ready to win at money?

Sign up for Flux and join 100,000 members of the Flux family

A button to App StoreGoogle Play store button
Excellent  4.9 out of 5
Star rating
No items found.