Embattled commercial office-sharing company WeWork was fighting with the Securities and Exchange Commission about a financial metric that gave the company's numbers a positive spin before shelving its initial public offering in September, according to previously unpublished correspondence detailed by The Wall Street Journal on Sunday.
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The SEC and WeWork were going back and forth about a metric called the "contribution margin" and other concerns, The Journal reported. It's important to note that the SEC and companies often go back and forth ahead of IPOs.
WeWork wanted to keep the contribution margin, which allowed the company to switch its 2018 bottom line from a net loss of roughly $1.9 billion to a $467 million profit, according to The Journal.
"As currently calculated and presented, we believe that your [contribution margin] measure could be misleading," an Aug. 30 letter from the SEC to WeWork said according to The Journal. "Please remove disclosure of this measure throughout your registration statement."
SoftBank Group Corp. Chairman and Chief Executive Officer Masayoshi Son listens to a speech during the SoftBank World 2018 conference on July 19, 2018 in Tokyo, Japan. (Photo by Tomohiro Ohsumi/Getty Images)
The SEC still had unresolved concerns as of Sept. 11, shortly before the IPO crumbled. The contribution margin could still be found in WeWork's revised prospectus more than 100 times in mid-September, when the company was hoping to drum up investors' support.
The regulator also questioned WeWork's predictions that included 100% occupancy of office spaces.
A spokeswoman for WeWork's ex-CEO Adam Neumann told The Journal that he and the company "disclosed related-party transactions in the [prospectus] in accordance with applicable law and good governance."
Adam Neumann. (Photo by Jackal Pan/Visual China Group via Getty Images)
WeWork is cutting jobs and exiting businesses as it implements a 90-day improvement plan following its failed attempt to go public.
FOX Business' inquiry to WeWork was not immediately returned.