Section:GDN 1N PaGe:41 Edition Date:190906 Edition:01 Zone: Sent at 5/9/2019 20:02 cYanmaGentaYellowbl
Friday 6 September 2019 The Guardian •
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FTSE 100 All share Dow Indl Nikkei 225 £/€ £/$
1.2325+0.0105 +0.0131Hi-tech offi ce startup WeWork may
cut value of IPO by more than half
Dominic Rushe
New YorkWeWork, the fast-growing offi ce rental
company, is considering cutting the
value of its upcoming fl otation by
more than half to $20bn (£16.2bn) as it
faces growing scepticism over its busi-
ness model and corporate governance.
The nine-year-old business has
shaken up the offi ce market, retool-
ing rented offi ces by adding beer taps,
potted plants and table football games
to buildings it now runs in 111 cities
around the world.
We Co, WeWork’s parent company,
had been expected to go for an initial
public off ering (IPO) that valued the
business at $47bn, but according to
the Wall Street Journal it is now con-
sidering a valuation of $20bn.
We Co is the latest in a series of high
profi le and heavily loss-making com-
panies to go public. Others, includingride-share startups Uber and Lyft, have
failed to shine as public companies. If
the reported cut in valuation is true,
Charles Elson , director of the J ohn
Weinberg Center for Corporate Gov-
ernance at the University of Delaware,
said it could show that “irrational exu-
berance has left the market ”.
We Co fi led its IPO application last
month and the fi ling worried some
investors. While its revenues are
soaring, so are its losses. It more than
quadrupled revenues between 2016
and 2018 to $1.8bn. But the company
has lost $2.9bn in the last three years.
The prospectus also warned: “We
have a history of losses and, especially
if we continue to grow at an acceler-
ated rate, we may be unable to achieve
profi tability at a company level ... for
the foreseeable future.”
The prospectus also revealed cor-
porate governance issues that raised
some red fl ags. Co-founder Adam Neu-
mann owns several of the propertiesthat WeWork leases and has borrowed
money from the company at generous
interest rates. One $7m loan granted in
2016 came with a rate of just 0.64%.
Neumann has cashed out more
than $700m in shares and debt from
the company, according to the Wall
Street Journal – an unusual move for
a founder ahead of a share sale.
The IPO prospectus also revealed
that Neumann was paid $5.9m for the
use of the word “we”. Ahead of the
IPO, WeWork rebranded itself as We
Co, a move that led the company to
pay the cash to We Holdings, a com-
pany controlled by the co-founder, as
“fair market value” for the trademark.
This week the company disclosed Neu-
mann had paid the company back “at
Adam’s direction ”.
Scott Galloway, a marketing pro-
fessor at New York University and
business commentator, wrote on his
website: “Adam also owned the rights
to the ‘We’ trademark, which the fi rmViagogo critics
unimpressed
after watchdog
halts court case
Rob DaviesThe competition watchdog has sus-
pended court proceedings against
the ticketing website Viagogo, saying
it ha d made changes that addressed
concerns the site was fl outing laws
designed to protect consumers.
But critics of Viagogo immediately
questioned the “surprising” decision
and said concerns about the site’s busi-
ness practices had not been put to rest.
The Competition and Markets
Authority (CMA) was seeking to have
Viagogo found in contempt of court
for failing to comply with consumer
law when selling tickets for concerts
by artists such as Ed Sheeran , who has
previously clashed with the site.
The regulator had complained
Viagogo was not doing enough to
inform buyers they might be turned
away from events at which the artist,
venue or promoter was refusing entry
to people who had bought tickets from
resale sites. The company was also
publishing “misleading” information
about the number of tickets available,
it said, while some seat numbers were
not being displayed on ticket listings.
The regulator’s complaints were
among factors that led Google to banViagogo from paying to appear in
adverts at the top of search results.
The CMA said yesterday that Via-
gogo ha d made enough changes to the
website that it no longer needed to pur-
sue the legal action.
Andrea Coscelli , the CMA’s chief
executive , said: “The Viagogo web-
site UK customers now visit is worlds
apart from the one they faced before
the CMA took action. Key information
needed to make informed decisions
before buying a ticket is now much
clearer including on where you’ll sit
in a venue and whether you might be
turned away at the door .”Viagogo said: “Viagogo is pleased
it has been able to work with the CMA
to fi nd solutions to the fi nal few areas
of discussion, as confi rmed by today’s
statement. We have strived at all times
to ensure we are correctly applying the
CMA order, this has been a complex
and detailed process, and open dia-
logue with the market authority has
been essential.”
The Labour MP Sharon Hodgson
said the CMA’s decision was a sur-
prising “backwards step”, adding
that Viagogo had made only “vanity
changes” to its site. “I will be writing to
the CMA and the government ministerabout this issue to put pressure on
them to keep this issue under review
and urge them to step in immediately
if further evidence against Viagogo
comes to light,” she said.
The music industry group FanFair
Alliance said that although Viagogo
was more transparent than it used to
be, it was still not treating consum-
ers fairly, accusing the CMA of “not
fi nishing the job”.▲ Ed Sheeran, right, who has clashed
with Viagogo, joins Stormzy on stage
at the O2 Academy Brixton in May
PHOTOGRAPH: PJP PHOTOS/REX/SHUTTERSTOCKTesla accelerates
to third position
for UK car sales
Jasper JollyThe Tesla Model 3 has rapidly become
Britain’s third most popular new car
as sales of electric vehicles doubled in
the past year. Owners registered 2,082
Model 3s in August, according to data
from the Society of Motor Manufac-
turers and Traders.
Model 3 registrations overtook cars
such as the Ford Focus, Vauxhall Corsa
and Mercedes-Benz A-Class. Only the
Ford Fiesta and the Volkswagen Golf
sold more.
Pure electric vehicles remain the
preserve of a tiny minority of British
car owners, representing 1.1% of car
sales this year. Sales of battery electric
vehicles have almost doubled year on
year in the 12 months to August, from
about 9,000 in 2018 to 17,393 this year.
Tesla, founded in the US by Elon
Musk, has been a pioneer in electric
vehicle production. The Model 3 retails
at between £36,490 and £50,000, mak-
ing it the most aff ordable car from the
marque but still signifi cantly more
expensive than Britain’s other most
popular cars. Of the two top sellers,
the Fiesta had 3,978 registrations and
the Golf 3,439.
Other carmakers are starting to
catch up with Tesla as the pressure to
move away from fossil fuels intensi-
fi es, suggesting that prices for electric
cars could fall.decided they must own and paid the
founder/CEO $5.9m for the rights.
The rights to a name nearly identical
to the name of the fi rm where he’s the
founder/CEO and largest shareholder.
YOU. CAN’T. MAKE. THIS. S---. UP.”
Elson said there were a number of
worrying factors in We Co’s IPO pro-
spectus, not least its dual-class share
structure, which would allow the
company’s founders to retain control
despite having sold the majority of
shares to investors. Such structures are
common in tech IPOs. “These struc-
tures mean shareholders are powerless
to deal with any kind of mismanage-
ment,” said Elson. “At some point the
market has to say enough.”
We Co had been planning to debut
in September and its shareholder road-
show could start as early as next week.
It is unclear whether it will push ahead
with the IPO this month or decide to
delay. We Co declined to comment.
The property fi rm is the latest in a
new generation of tech companies to
run into problems as they seek to go
public.
Uber and Lyft also attracted sky-
high valuations ahead of their IPOs
only to watch their share prices col-
lapse as investors questioned their
ability to overcome their huge losses.
Uber’s share price hit an all-time low
of $30.70 a share this week.$47bn
Expected valuation of WeWork at
the time of the original fl otation
application, fi led last month$20bn
Valuation the company is now
considering for its IPO, according
to media reports in the US$2.9bn
Amount the company has lost in
the past three years. It may not be
profi table ‘for the foreseeable future’No more exuberance?
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