Study Finds WeWork Is Overvalued — But Still Worth $15B

WeWork founders
Wework Co-Founders Miguel Mckelvey And Adam Neumann

An academic study has determined WeWork is overvalued by 18%, but is one of the least overvalued "unicorn" technology companies, Wired reports.

The study from the National Bureau of Economic Research examined 135 tech startups valued at $1B or more, and looked at how their share structures worked.

The valuations put on these companies regularly hit the headlines when a new investor buys a stake. But these valuations typically assume that each share in the company has the same value.

The study found that newer investors often receive better terms than older investors, who are often among the first staff at the company. When the company is sold these terms often state that newer investors get paid out first, meaning older investors can be left with little or nothing, making their shares worthless and overstating the value of the company.

By looking at public filings on company shareholder structures, the study found WeWork has a value closer to $15B, rather than the $18B reported when it received new investment in March.

That makes it 18% overvalued. But this puts it at the upper end of the scale — the average overvaluation was 50%. Bigger unicorns like WeWork, Uber and Airbnb tended to be less overvalued because they had the fewest special terms attached to their shares.

The study only looked at valuation in terms of shareholder structure. The debate over whether WeWork has a business model that justifies its valuation will no doubt continue.

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Related Topics: Airbnb , Uber , WeWork
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