WeWork's bailout cuts its valuation by 83% — but ups Adam Neumann's payout to $1.7B
Kombucha taps don't pay for themselves... WeWork loses $219K every hour — and last month's IPO was supposed to hook it up with billions of much-needed funding. Since that didn't happen, WeWork's due to run out of money by November. It needed a bailout, and the WeWork board just got one. Here's the Matrix-style situation it faced:
- Red pill?: A debt bailout from JPMorgan, WeWork's top bank.
- Blue pill?: An equity/debt bailout from SoftBank, the Japanese investment company that already owns 1/3 of WeWork shares.
- The decision: SoftBank. WeWork will receive an additional $6.5B from SoftBank, bringing the total Softbank's invested to $13B.
- The shocking numbers: The $13B SoftBank's invested in WeWork so far is now more than WeWork's total worth — this deal slashes the unicorn's valuation from $47B to $8B.
But the most shocking number is $1.7B... That's how much ex-CEO Adam Neumann is getting paid to walk (further) away from the company he built. He'll step down from the board in exchange for the following $1.7B payday from SoftBank:
- $185M: That's an ambiguous "consulting fee."
- $970M: That's how much of Adam's WeWork stock SoftBank agreed to buy.
- $500M: That's a loan Adam got from JPMorgan that needs to be repaid ASAP — SoftBank is bailing that out, too.
This isn't fair for employees... Adam's walking away a billionaire. But many of its thousands of concerned WeWorkers have been paid in stock options, which are now worth much less since WeWork's valuation plummeted. The WeWork bubble (aka its $47B valuation) popped because Wall Street noticed that Emperor Adam on his Softbank-funded throne had no clothes.