"Slashing its valuation in half" means reverting to X, the price around which WeWork last bought back shares. Even this reduced value is likely twice as high as it should be.
https://www.reuters.com/article/us-wework-m-a-softbank/softb...
Automatic conversion clauses typically force convertible pref to convert to common in the event of an IPO. This makes liquidation preferences generally irrelevant to public offerings.
In the case of Square's IPO, Series E preferred had a provision giving them extra free common stock to make up the gap if it IPO'd below $18.55 (which it did).
Maybe a $2B round is tiny in the face of annual losses of $1.9B which was 2x the loss from the year before.
Who really knows anymore, maybe doubling your losses is just another metric VCs can spin as positive growth. After all the Unicorn IPO mantra seems to be, but we can stop our billion dollar losses whenever we want and then its all profits.
[1] https://techcrunch.com/2019/07/18/wework-ceo-adam-neumann-ha...
Damn, I know someone who got screwed over by the IPO lockup there.
Softbank is a Japanese holding company.
Organizations making large investments in US companies and US markets are absolutely subject to US securities laws.
Softbank have been transparent from the start. When Uber did its split round, even on HN, a number of commenters were convinced the spread was legitimate. That the top-of-the-stack pref was actually worth 2x the next-in-line pref. The media fetishised the post-money valuation, and the details got lost in the conversation amongst uninformed investors.
It should be possible to figure out the formula for how much an investor needs to invest in a given round, given a previous investment into the company, such that the downside of investing at an increased valuation exceeds the upside of the existing shares being valued higher than before.
In other words: How much would SoftBank need to invest such that it wouldn’t benefit from bluffing on the valuation?