Continuing on its ‘getting the $$$Billions spree’, WeWork has announced a $3 Billion investment from Softbank Corp. (and not the company’s Vision Fund). And before we get into the when and the how and the “why” of the news, WeWork has received this $3 Billion just months after Softbank bank-rolled the company with a $1Billion cheque in August, in the form of a convertible note.
The current round, unlike the August one, comes in the form of a warrant, under which SoftBank will pay WeWork $1.5 billion on Jan. 15 and the remaining on April 15. Once the bankrolling part from SoftBank’s end is complete, WeWork will see its valuation soar to a minimum of $42 Billion. Yes.
The latest $3Billion round comes amid much speculations of SoftBank Corp. looking to buy up a majority stake in WeWork.
For those highly unlikely category of folks who are unaware, New York-headquartered WeWork leases office spaces and rents them out to individuals and startups, and has said it hopes to boost its membership in China to one million by 2021.
While it started out as a co-working space for startups, the company has successfully transformed itself into a premium corporate office space seller. More recently, the company has put a lot of focus towards offering customised enterprise offerings for companies like Microsoft among others, who are looking to lease for a fairly longer duration and are hence a more sustainable source of large revenue. In fact, 29% of company’s current revenues come through its this product line.
But then, what one could ask, is for how long will this continue ? Even though WeWork has witnessed mind-boggling growth recently, the company is far from being profitable. In its first ever release of financial results in August, the privately held firm said its net losses jumped to $723 million over the first half of 2018 from $154 million a year earlier.
And a $42 Billion valuation tag does not really help.
Editor-at-large and co-founder at The Tech Portal. He is a tech enthusiast with interests in new-age technology fields like Ai, Machine Learning, AR/VR, Outer Space and related stuff. Drop him a mail anytime, very reachable.