WeWork took another step forward in its path to going public today, and the co-working giant claims it will be able to withstand and grow during a major recession as confidence in the economy is starting to dip.
According to the S-1 filing with the U.S. Securities and Exchange Commission today, WeWork brought in $1.8 billion in revenue in 2018, a 106 percent spike over 2017. WeWork is on pace to bring in $3.3 billion in revenue in 2019, which would be a 112 percent rise.
Losses more than doubled each of the last two years to high of $1.9 billion in 2018. But so far this year, losses are starting to slow. For the first six months of 2019, WeWork posted losses of $904 million, an increase of 25 percent over the first half of 2018.
Worldwide, WeWork has 527,000 members across the globe, up 97 percent for the 268,000 members the company had as of June 1 of last year.
WeWork didn’t say how many square feet it has across the globe. However, the company did note that it has identified up to 40 million square feet worth of potential future locations, which would accommodate an additional 724,000 desks.
Large companies, including behemoths such as Amazon, Microsoft, DocuSign, Salesforce and many more are becoming a larger part of WeWork’s business. The company offers services for enterprises to set up large offices with flexible terms in WeWork locations. Today, enterprises comprise roughly 40 percent of WeWork’s member base.
WeWork is the latest highly valued company growing at hyper speed while losing plenty of money to file for an IPO this year. The rash of companies going public has come within the context of a nearly decade-long run without a major global recession.
However, the tides may soon turn. The stock market has plunged more than 650 points today after the U.S. bond market flashed a troubling phenomenon that has been an indicator of recessions in the past.
*U.S. 10-YEAR YIELD BELOW 2-YEAR RATE FOR FIRST TIME SINCE 2007
— Joe Weisenthal (@TheStalwart) August 14, 2019
Slowdowns constantly loom over the real estate industry, stoking fear that new office buildings will sit empty for years in a tough market and rapidly growing companies will pull back. However, WeWork noted in the filing that downturns in individual countries and regions haven’t hurt the company in those places.
Following the Brexit vote in 2016, London’s commercial office market slowed significantly, but WeWork’s occupancy grew, the company said. When a monetary crisis hit in Argentina, WeWork’s offices there stayed above a break-even point as the company continued to add more space.
“Not only do we believe our business model mitigates the pressures of an economic recession, we also believe that our model could position us well in a downturn,” according to the filing. “An economic downturn may provide us an opportunity to further scale our platform at more attractive unit economics. Lease and construction costs may decrease in an economic recession, as evidenced by the approximately 10% average decline in construction costs for non-residential buildings in the United States during the last economic recession.”
WeWork noted that it studied the recession of 2008 extensively, but the company has yet to face a global downturn. In the risk factor section of the document, WeWork noted that a global recession could lead to mass member terminations. Regional issues in the company’s top U.S. markets — New York City, San Francisco, Los Angeles, Seattle, Washington, D.C. and Boston — could have an outsized impact on the company as well.
The company didn’t disclose any data on individual markets in the filing. WeWork lists 16 Seattle-area locations on its website. In March the company said its total leased office space in the Seattle area was 1.7 million square feet, up from 900,000 square feet as of last summer.