Signage is seen at the entrance of the WeWork offices on Broad Street in New York.
David ‘Dee’ Delgado | Bloomberg | Getty Images
The valuation targets for controversial real estate company WeWork are being dramatically lowered, sources told CNBC’s David Faber.
Even at a $25 billion valuation, the demand is not there, according to the sources. WeWork last raised money at a $47 billion valuation in the private market.
WeWork’s earlier valuation came after SoftBank, the company’s biggest backer, invested $5 billion in primary growth capital and an additional $1 billion in secondary funding.
WeWork, which rents out work spaces to start-ups and other businesses, was founded in 2010 and, according to its website, is “committed to elevating the collective consciousness of the world by expanding happiness and unleashing every human’s superpowers.”
Some prominent real estate investors, however, are less certain.
Sam Zell, who made nearly $6 billion in the commercial real estate business and joined CNBC on Wednesday, slammed WeWork for offering little more than what already exists in the marketplace.
“I had the privilege of investing in this kind of company once before. As a matter of fact, this kind of company began in 1956,” when office subletting emerged, Zell said on Wednesday.
“Every single company in this space has gone broke,” he said, pointing to WeWork’s IPO disclosure last month of net losses of more than $900 million for the first six months of 2019 on revenues of $1.54 billion.
WeWork, which rebranded itself as the We Company, has 528 locations with plans to open 169 new locations and said that half of its memberships are based outside the U.S. The WSJ first reported the lowered valuation.