Co-location work space company WeWork, or the WeCompany, is a multi-billion dollar startup that buys buildings or takes long-term leases and then sub-leases the space by the desk or office. The company makes money by pocketing the difference in the lease rates. The firm earned notoriety by developing space with beer taps and ping-pong tables that attract Millennial workers.
The company loses money by the truck load, and it has no plan for how to stop the losses when the economy eventually rolls over and it loses short-term renters. But no matter, it has already filed to sell shares to the public, and investors are eagerly awaiting their chance to get involved.
Now the WeCompany reportedly wants to sell billions of dollars in bonds before it goes public. Typically companies do this to build a war chest, hoping to give investors confidence that they won’t run out of money anytime soon. And there’s another reason. Companies sell debt because they intend to pocket a chunk of the proceeds from selling shares, which investors sometimes frown on because it doesn’t make the company better off.
It’s been a tricky IPO market, with some companies like Beyond Meat soaring after selling shares, while others, such as Uber, struggling to stay above the IPO price. The one common factor among most of the big names going public this year? They all lose money. This could be big problem if the economy slows down in the second half of the year.