Just a couple of years ago WeWork attempted an initial public offering or IPO at a valuation of $47 billion dollars. This ridiculous valuation led to investor scrutiny and as a result, forced the company to reevaluate the company’s value. In an attempt of desperation, WeWork cut its IPO valuation to $10 billion. Even at this discount, WeWork failed and stayed a private company.
Luckily for WeWork, there’s an easier way to go public without directly filing with the Securities and Exchange Commission. Special-purpose acquisition companies (SPACs) are public companies that purchase private companies, making it easier for a private company to go public. After making that choice, it debuted, offering investors a chance to enter the shared-workspace market.
How to Buy an IPO via SPAC
WeWork wasn’t directly listed as a public company. Instead, you needed to buy stock in the SPAC that merged with WeWork. In WeWork’s case, BowX Acquisition Corp. (NASDAQ: BOWX) purchased the office space provider to make WeWork a public corporation.
SPAC vs IPO
SPACs, also known as “blank check companies,” are companies with no underlying assets or operations. These companies raise money from investors, typically charging $10 per share. Once the company raises this money via an IPO, the managers of the SPAC source private companies to merge with, making it easier for these private companies to go public.
When you invest in a blank check company, you’re investing in the team who manages the SPAC. If a SPAC can acquire a private company at a good deal, the value of the SPAC could increase dramatically after the merger is finished. Since these private companies aren’t filing with the SEC to go public, SPACs are seen as less transparent than stocks that have had a traditional IPO.
SPACs offer a faster route to go public compared to traditional IPOs. Companies going public via SPAC are also able to provide forward looking estimates for their financials, offering a lookat potential growth to investors.
When was the WeWork IPO Date?
WeWork first filed for an IPO back in April 2019. Unfortunately, this IPO failed under investor scrutiny regarding an overvaluation of the company. Now, WeWork didn’t conduct an IPO; instead, It merged with BowX Acquisition Corp, a public company, to become a public company.
BowX and WeWork announced their merger on March 26, 2021. They entered into a definitive agreement where BowX valued the company at $9 billion after its debts. Through the acquisition, WeWork planned to raise $1.3 billion in funding to support its future growth plans.
The transaction was approved by the WeWork and BowX Board of Directors. The stock made its debut October 21, 2021.
For more information on upcoming IPOs, check out Benzinga’s IPO calendar.
WeWork Financial History
WeWork hasn’t had the best financial history, posting losses throughout 2019 and 2020. The company focuses on commercial real estate, offering flexible office space for businesses and independent contractors that don’t need long-term leases. With the COVID-19 pandemic causing many workers to shift to a work from home setting, WeWork posted a $3.2 billion loss in 2020.
With all this considered, the company is still valued at $9 billion after debt. This isn’t much of an achievement, considering the firm has raised over $12 billion in funding over the course of its existence. Nonetheless, if WeWork can sustain itself among the pandemic, it may be a good buy opportunity for the long term.
WeWork (NYSE: WE) Stock Potential
BowX Acquisition Corp. conducted its initial public offering in August 2020. The shell company issued 42,000,000 shares, raising a total of $420,000,000. Similar to most blank check companies, BowX issued its units at a price of $10 per share.
BowX recently surged over 7% on March 26 on the news of its WeWork merger, and the stock is currently trading at $11.71. The merger has unanimous support from both companies’ board of directors, and now they just need to fulfill certain closing requirements. With the influx of cash WeWork will receive from the merger, the company will be less financially strained and may be able to operate more efficiently.
How to Buy WeWork Stock
Buying WeWork through a SPAC was just as easy as buying any other stock. Since the blank check company that purchased WeWork was public, you had to buy the SPAC stock. In WeWork’s case, the company was BowX Acquisitions Corp. (BOWX). Upon WeWork’s debut on October 21, 2021, the stock traded as NYSE:WE. To buy WeWork, you’ll need to make an account with a stock brokerage account if you don’t already have one.
Step-by-step Guide:
- Sign up for a stock brokerage account.
To invest in WeWork you’ll need to make an account with a stock brokerage and buy WeWork (NYSE: WE) Some good choices for beginners are Robinhood and Webull, as they offer simple user interfaces that you can access via your computer or mobile device.
When you sign up for a stock brokerage account you need to provide the platform with the following information:
• Social Security number
• Bank account information
• Email
• Birthday
Once you’ve set up your account, all you need to do is add funds to your account before purchasing WeWork. Some platforms like Robinhood offer instant access to your funds, so you can get going right away. - Fund your account.
To fund your Robinhood account on your mobile app, go to the account tab and then tap on “Transfers.” You can then select the amount of money you want to deposit into your account to initiate the transfer. Transfers can take a few days to process, but Robinhood offers up to a $1,000 instant deposit that you can access right away.
Other stock brokerages have similar processes for funding your account. Keep in mind that these platforms use wire transfers to fund your account, so you’ll need to provide the platform with your bank account and routing numbers. - Buy Wework
You can buy WeWork as a market or limit order. Market orders will purchase the stock at the market price of the asset, and they’re usually executed instantly. Alternatively, limit orders only buy the stock if the price hits a certain price. For example, you can set a limit order for WeWork at $10, and if the price of the stock falls from $11.71 to $10, then your order will be filled.
Unfortunately, Robinhood doesn’t support options trading on WE. Robinhood lets you buy calls and puts on many stocks, allowing you to leverage your capital. These options are higher-risk investments, so make sure you’re okay with taking risks before purchasing calls or puts on Robinhood.
Best Online Stockbrokers
Take a look at our list of best brokers to consider.
Is WeWork (NYSE: WE) a Good Investment?
WeWork seems to be the future of office space. Corporations of all sizes don’t want to spend as much on their facilities. Smaller companies needs offices where they can get started, and some workers simply need a place to crash in the interim. WeWork is sure to grow in the aftermath of the COVID-19 pandemic and corporate downsizing caused by both the Great Resignation and the call for more remote work options. Take a look at WE in an effort to diversify your portfolio.
Frequently Asked Questions
Are SPACs Good Investments?
SPACs are an increasingly popular way for private companies to go public. Blank check companies serve as an additional way for companies to go public over a traditional IPO. SPACs can bring private companies public quicker than a traditional IPO and also provide forward looking forecasts. Investors should approach the SPAC market with caution similar to traditional IPOs as the private companies may have a limited history of financials or be pre-revenue companies.