‘WeWork’ Failure Might Unleash Universal Selloff
Oct. 27, 2019 (EIRNS)—The collapse of “WeWork,” the startup which had declared its value at $47 billion in anticipation of a public offering, is sending panic waves and could unleash a general selloff on all markets, traders say.
WeWork collapsed once it opened its books in order to make a public offering, and everybody could see that the company was consuming more capital than it earned. WeWork was created in 2008 to offer office space for rent and was considered to be a “unicorn,” i.e., among the luckiest start-ups that grow up to over $1 billion. However, when its actual worth was revealed, it retracted its public offering. It was then bailed out by its main investor, SoftBank, with $9.5 billion on Oct. 22. Ready to bail out WeWork was also JP Morgan, indicating that the Plunge Protection Team had mobilized.
The WeWork case has opened the Pandora’s box of the so-called “unicorns” world, which proves to be a total fraud. The failure of WeWork’s public offer might have blocked many planned IPOs, and scared investors. And the tech sector can be the trigger for a selloff of equities and debt, spreading contagion to other sections of the bubble, starting with the energy sector. An unstoppable meltdown could be the result.