Adam Neumann (Credit: Getty Images)
In a sign that perhaps interest in startups is waning among investors, the value of WeWork’s first bonds has dropped dramatically.
At the end of April, WeWork raised $702 million by selling new seven-year bonds, but they have fallen in value in the secondary market in just one week, the Wall Street Journal reported. On Wednesday, the bonds traded at 96 cents on the dollar, representing an 8.6 percent yield. Such a drop could mean it’ll be more expensive for WeWork to issue debt in the future.
Mike Kirkpatrick, a senior portfolio manager at Seix Investment Advisors, said fast-spending startups like WeWork and electric car-maker Tesla are “ultimately at the mercy of others,” and such a dynamic “can spiral out of control.”
WeWork, valued at $20 billion, currently has $18 billion in lease obligations, including $5 billion due by 2022. Bloomberg reported last month that the company doubled its revenues in 2017 to $866 million, but it also more than doubled its losses to $933 million. The average revenue it makes per customer declined by 6.2 percent to $6,928. [WSJ] — Kathryn Brenzel
Powered by WPeMatico