The news this week that WeWork has ‘postponed’ its multi-billion-dollar New York listing will have come as no surprise to Property Week readers.

David Parsley

Even New York magazine has spotted our coverage. In June, it quoted from one of our most read articles of all time – ‘The cult of WeWork’ (published in August 2018) – in an article headlined ‘The I in We’, profiling the group’s founder Adam Neumann.

It wrote: “Summer Camp was also the place where Neumann’s gravitational pull was at its strongest. At last year’s event, according to a report in Property Week, a British real estate publication, Neumann sat on stage next to his wife and McKelvey as the crowd sang: ‘Olé, Olé, Olé.’ A WeWork employee from India started chanting, ‘Let’s go, WeWork, let’s go!’ while another from California screamed, “You’re changing the world, Adam! We love you.’”

Well his disciples may love him, but the market does not right now.

Whether the float was valued at $47bn, $20bn or as low as $10bn, investors remained unconvinced the listing was a good idea. Neumann’s determination to retain a tight grip on the business was the final straw. The investment community was not going to buy into the cult.

Ken Bertsch, executive director at the Council of Institutional Investors in the US, put it best: “I think it also would help if WeWork got real, ratcheting down the portrayal of Neumann as superhero, moving away from ‘elevate the world’s consciousness’ as its corporate purpose, reining in some of the odd non-GAAP metrics and no longer pretending to be a technology company.”

According to one industry sage, there’s a chance WeWork will miss its new listing deadline and may not float at all. He believes there are three key factors making the IPO less likely.

The first is that the economic downturn many are predicting makes WeWork’s business model look vulnerable. That WeWork has targeted large corporates to fill its space could turn out to be a bad move, points out the industry stalwart, as one of the first things big business does in a downturn is let go of excess office space.

Second, WeWork faces a lot of competition, especially in London, and it isn’t cheap compared with many of those rivals, which doesn’t bode well if we do have a recession.

Finally, the fact that Neumann has had to shelve the listing for now will, as we reported last week, lead to ratings agencies such as Fitch taking another look at the group’s credit worthiness. This could lead to the cost of raising finance becoming prohibitively expensive for WeWork, thereby curtailing its growth ambitions.

Of course, if the mounting evidence pointing towards a global economic downturn is wrong, WeWork’s less expensive rivals fail to nab market share and banks still support its financing plans, Neumann could still get his float away.

Then again….