DealBook Briefing: Why WeWork’s I.P.O. Struggles Could Hurt

DealBook Briefing: Why WeWork’s I.P.O. Struggles Could Hurt

Good Friday morning. Breaking: Howard Schultz, the former Starbucks C.E.O., called off his presidential bid. And don’t forget: I’m going to be in conversation with Blackstone’s Stephen Schwarzman about his new book, “What It Takes: Lessons in the Pursuit of Excellence,” at a DealBook TimesTalk in New York on Sept. 16. Get your tickets here. (Was this email forwarded to you? Sign up here.)

The co-working giant had ambitions to stage an outsize public stock offering that would give it a rich valuation and the opportunity to raise money from a new set of investors. It may have to put those plans aside for now.

WeWork is considering valuing itself in an I.P.O. at around $20 billion, Michael de la Merced and Peter Eavis of the NYT report, citing unnamed sources. That would be less than half a $47 billion valuation from January.

The company has also discussed taking more money from SoftBank, one of its largest investors, which could either help bolster its I.P.O. or allow it to delay the offering. (Nothing has been decided yet.)

It’s a bad sign for WeWork. The company, which offers work spaces for freelancers as well as Fortune 500 companies, had been counting on being able to raise money from public investors to finance its global expansion. Delaying an I.P.O. or selling fewer shares than expected could hurt its ability to borrow from banks.

It’s also a headache for SoftBank. The Japanese tech giant has already invested $10.5 billion in WeWork, and some of its executives have been leery of pouring more money into the company. And it’s in the middle of raising money for its next $100 billion-ish Vision Fund.

And it could be a turning point for huge, unprofitable companies backed by billions in venture capital. As investors have grown wary of businesses like Uber that are racking up losses — with no end in sight — the public markets may be turning inhospitable. That’s bad news for start-ups hoping to raise more money.

More: Palantir, the data consultancy that was last valued at $20 billion, is reportedly in talks to raise money in the private markets and put off its I.P.O.

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Today’s DealBook Briefing was written by Andrew Ross Sorkin and Stephen Grocer in New York, and Michael J. de la Merced in London.

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The Labor Department report is released at 8:30 a.m. Eastern.

U.S. markets are poised to open higher today, after they soared yesterday on the news of rescheduled U.S.-China trade talks. But there’s no reason to get carried away by hopes of an imminent solution.

The S&P 500 gained 1 percent yesterday after Washington and Beijing said they would resume discussions next month. It’s a sign of how investors are clinging to any sign that the trade fight could ease.

But few are optimistic that will happen. Both President Trump and President Xi Jinping of China are under pressure from domestic audiences to stay firm and not give up too much. There’s little harm to either side in favoring talks over action, so expect more words than deals for the time being.

The uncertainty will be a drag on U.S. economic output, which could slow by 1 percent through early next year, according to new research by the Fed. It’s the first study by a central bank to try to quantify the effects of the Trump administration’s trade battle, Nick Timiraos of the WSJ writes.

That’s a big reason the Fed is now expected cut interest rates later this month. The WSJ reports that the reduction is likely to be another quarter of a percentage point.

More: Target has told its suppliers it won’t accept any increased costs related to Mr. Trump’s tariffs.

More than a decade after a government takeover of the mortgage giants, the Trump administration will try to do what others have failed to do: set them on the path to becoming privately run companies.

The move suggests that more businesses are willing to engage in a debate they have historically shied away from. Walmart made waves this week when it adopted the anti-open-carry policy, along with plans to stop selling ammunition for military-style rifles. It also called on Congress to debate a new ban on assault weapons.

The moves may increase pressure on Washington. The founder of the gun-control advocacy group Moms Demand Action, Shannon Watts, tweeted, “We hope Senate leaders are watching this sea change.”

More: President Trump is preparing to introduce his latest proposals to curb gun violence, but they appear to be political nonstarters. And in case you missed it, Andrew spoke with Michael Barbaro of “The Daily” about Walmart’s move on guns.

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