WeWork filed its IPO — now meet its We Double
- WeTrade, which filed to go public less than 24 hours before WeWork did, has no ties to the office-sharing company.
- The mysterious company, which says it is working on a business plan for a Chinese travel "e-commerce platform," has no website and no customers.
- Like Tweeter Home Entertainment and Snap Interactive did in the past, WeTrade may cash in on confused investors.
WeWork unveiled the offering documents for its upcoming and highly anticipated IPO on Wednesday morning. But less than 24 hours earlier, a company with a similar name, WeTrade, also filed for its initial public offering. It's not the We stock you might want to invest in. It's likely a We party crasher.
To make matters even more confusing, WeWork is offering shares through its corporate parent the We Company, which along with the popular office-sharing business also owns a shared-space living company called WeLive and a pre-school concept called WeGrow.
WeTrade is not one of those companies, either. In fact, other than a name and a suspiciously concurrent IPO timing, WeWork and WeTrade — which is looking to launch a Chinese travel website — have no ties and very little in common.
WeTrade, like WeWork, says it is membership-based business. And both companies are offering shares to the public to fund their money-losing operations. But that's where the similarities end.
A tale of two IPOs
WeWork has 527,000 customers, $1.5 billion in sales in the first six months of the year, as well as $2.4 billion in cash. Its IPO prospectus is a hefty 400 pages, filled with plenty of lofty corporate branding. On top of its mission statement to "elevate the world's consciousness," the prospectus also contains a two-page photo of a lush green forest. It reads: "We invite you to join us in creating a better world. We are just getting started."
WeTrade's prospectus is a comparatively compact 57 pages, and short on detail. A section dedicated to describing the company's code of ethics is a single line long. "We do not currently have a code of ethics," it says. WeTrade also doesn't yet have a website. Nor a finished business plan. Its bank account balance: $441.
In recent years, a number of hot IPOs have led to costly company confusion among investors.
Shares of Zoom Technologies, a nearly defunct Chinese telecom that hadn't booked a dollar of sales in eight years, soared last March, eventually rising 50,000% from its initial pennies per share. Investors appear to have been looking to invest in Zoom Video Communications, a buzzy enterprise-teleconferencing software start-up that was set to go public the following month.
And when Snapchat parent Snap Inc. had a hot IPO two years ago, shares of Snap Interactive, which creates dating apps and is unrelated to the messaging company, also enjoyed several days of heated trading.
Then there was Tweeter Home Entertainment, which saw it stock briefly jump 750% in 2013. You can probably guess why. Tweeter, unlike a similarly named company, is not in the social media business.
But those IPO investing misfires involved unrelated companies that were already trading and got swept up in the frenzy. WeTrade was just formed earlier this year, on March 28, days after WeWork's 2018 results were reported, fueling speculation that the office-space company could soon go public.
WeTrade says in its IPO filing it is based in Wyoming, but its only corporate address in the prospectus is listed as "Beijing City." The phone number in the prospectus for that address appears to no longer be in service.
Andy in accounting
WeTrade's auditor is a company called TAAD, which is based in shared office space in a suburb of Los Angeles. A phone call placed to its number on Tuesday night resulted in a return call from a person who identified himself only as Andy, and said he was a partner at the firm. Andy said he uses the company's phone number as his home line as well. He refused to answer any questions about WeTrade, other than to say it was a client.
Andy did say TAAD regularly works on IPOs and is certified by the Public Company Accounting Oversight Board. TAAD's website lists three employees, none of them named Andy. And the PCOAB's website shows its inspections of TAAD's work in 2015 and again last November found that TAAD regularly failed to verify the accuracy of its client's accounts, which the PCAOB noted was the "essential purpose of the audit."
It's not clear how WeTrade could make money off of any investor confusion with WeWork, or if it is even intending to do so, but the offering document that WeTrade filed Tuesday will allow it to solicit investors for its shares at the same time that WeWork is expected to be rounding up investors for its IPO.
Investor beware.