WeWork was profitable on a community-adjusted basis
| WeWork was profitable on a community-adjusted basis | |
|---|---|
| MISLEADING | |
| "WeWork's "community-adjusted EBITDA" showed the company was profitable and its business model worked." | |
| Domain | Business, Finance & Scams |
| Tactic | Statistical & Evidentiary Distortion |
| Era | Current |
| First seen | 2018 |
| Origin | WeWork's April 2018 bond offering documents and investor materials |
| Last reviewed | 2026-10-30 |
| Further reading: books on Business, Finance & Scams | |
Co-working company WeWork, led by founder Adam Neumann, presented itself as a technology company that would "elevate the world's consciousness." In its 2018 bond offering, it introduced a measure called "community-adjusted EBITDA," which turned a large loss into a profit.
The metric left out many of the ordinary costs of running the business.
What the evidence shows
- The adjustment. Community-adjusted EBITDA excluded expenses such as marketing, general and administrative costs, and design and development costs, along with interest, taxes, depreciation and amortization. Under standard accounting, WeWork lost about $1.9 billion in 2018.
- Market reaction. The metric drew widespread ridicule from analysts and was dropped from WeWork's 2019 IPO filing.
- Collapse. WeWork's planned 2019 IPO, at a valuation once put at $47 billion, was withdrawn in September 2019 after investors scrutinized its finances and governance. Neumann stepped down. The company filed for bankruptcy in November 2023.
Why it matters
Made-up profitability metrics let companies tell a growth story their accounts do not support. WeWork's became a textbook example.
Sources
- WeWork Companies Inc., bond offering memorandum, April 2018, as reported by The Wall Street Journal.
- WeWork, Form S-1 Registration Statement, US Securities and Exchange Commission, August 14, 2019.
- Reuters, "WeWork files for bankruptcy," November 7, 2023.