WeWork Co-Founder and CEO, Adam Neumann, recently cashed out over $700 million from his international co-working real estate startup.
These payouts come before WeWork’s initial public offering (IPO) goes up either later this year, or early next year, which is an unusual development. Neumann is still the majority shareholder. But typically, company founders don’t convert their holdings to cash until after their IPO.
As such, many wonder if Neumann’s confidence about his startup’s long-term potential is waning—or if he’s overly optimistic.
WeWork’s Incredible (and Uncertain) Value
Since its founding in 2010, WeWork has demonstrated an incredible rate of development.
By 2014, the company earned $75 million in revenue, with that number rising exponentially to $1.8 billion by 2018. Maintaining that growth, WeWork was last valued at $47 billion in January, though now there’s some skepticism about those figures.
A $47 billion assessment would make WeWork the highest valued upcoming IPO across the U.S. However, some investors estimate the company is only worth half that amount. After all, in 2018, the company lost $1.9 billion and requested another $1 billion investment from its primary backer, SoftBank.
Plus, when looking at other recent tech startup IPOs, a concerning pattern begins to show itself. For instance, both ride-share startups Uber and Lyft recently experienced massive failures with their IPOs. In fact, Uber’s attempt ended up being one of the biggest IPO flops in the history of Wall Street. This could spell out a poor market environment for tech IPOs at this time.
On top of all this, Neumann has previously stated, “I need to have the biggest valuation I can because when countries are shooting at each other, I want them to come to me.” With so many warning signs and Neumann’s valuation-driven mindset, the integrity of WeWork’s appraisals can’t help but be in question.
Neumann’s Next Investments
According to the Wall Street Journal, Neumann is already investing his $700 million to expand WeWork’s reach further.
This includes setting up a family office to invest his recent proceeds and hiring a new team of financial managers. Additionally, Neumann is expanding his grasp on real estate throughout San Francisco, San Jose, and New York City. He’s purchased multiple homes and commercial properties across these metropolitan areas and intends to transfer everything under WeWork’s control.
Overall, these investments would imply that Neumann is continuing to spearhead his company’s growth and not planning to jump ship. Still, it’s impossible to ignore the unusual practices coming out of WeWork, and the inconsistent reports about the company’s health.