1 – WeWork Announces Its New President
After a few months under SoftBank's direct control, WeWork announced this past weekend its new president, Sandeep Mathrani, an executive with over 20 years of experience in the real estate market. Mathrani served as president of the retail arm of Brookfield Property Group, a giant in the global real estate sector. The choice of the new CEO signals a new strategy at WeWork — which, despite calling itself a technology company, its core business remains, in essence, the leasing of physical spaces. The focus now is on minimizing losses and improving operational efficiency.
2 – Things Went South
The WeWork IPO saga raised a red flag in the American financial market. Strategists at Morgan Stanley announced the “end of the days of unlimited capital for businesses that don't turn a profit”.
In a note sent to clients, the bank stated that, despite it having been an extraordinary period, paying inflated valuations — as had been the practice — is a bad idea. Especially when dealing with businesses that may never generate a positive return. To illustrate the “phenomenon,” the bank compared the current situation to the AOL-Time Warner merger, signaling the end of the dot-com bubble.
This appears to mark the end of the road for WeWork's IPO-that-never-was. Officially cancelled amid controversy surrounding the now-former CEO Adam Neumann, and the company's questionable profitability model.
3 – An Ongoing Saga
And the crisis that took hold of WeWork's leadership since the announcement of its IPO intention continues to worsen. The latest news is that the controversial — and somewhat eccentric — CEO Adam Neumann is stepping down from leading the startup. The primary reason appears to be pressure from board members and investors (including SoftBank). The company is not currently searching for a new CEO; for the time being, executives Sebastian Gunningham and Artie Minson will co-assume leadership.