Fortune: Robert Rostan in We Work Is Only Making its Image Problem Worse…

By Erik Sherman

We Company, parent of shared office space provider WeWork, has an image problem that has become trickier since it filed paperwork for an IPO. And its recent efforts to control the conversation may not be working.

We wants to be a tech company and get the large-multiple-of-revenue valuations such businesses get. Its last private investment was at a $47 billion valuation. But We is still a real estate business that subdivides leased spaces. Complicating things is that the company offers short-term leases to its customers while taking long-term ones for properties. In the case of an economic downturn or space that doesn’t work for them, renegotiating a lease may not be an option.

Issues like a multiple-class stock structure that locks in control for insiders and sweetheart deals for co-founder and CEO Adam Neumann (such as paying his company $5.9 million for rights to use the trademark “We”) have left many skeptics.

Over the last couple of days, some news has made it seem like We is trying to quickly reform its image—somewhat, at least—before the IPO. The company is reportedly considering cutting its valuation by more than half, according to the Wall Street Journal. An amended filing with the SEC says that Neumann’s company has returned the $5.9 million. However, he still holds a financial interest in some of the properties that We leases.

A representative of We told Fortune that the company would “politely decline comment.” (It is normal for a company in a pre-IPO quiet period to refrain from commenting on its business.)

Is this enough to wipe things clean? No, say some experts.

“The more you walk it back, the more the media pay attention, the more shareholders pay attention, the more potential shareholders pay attention,” said Adele Cehrs, CEO of PR agency When and How and veteran of IPO-related crisis communications campaigns. “I think it’s going to make people dig and dig and dig more, which isn’t good when you have an IPO coming.”

“The company and professionals keep trying to change the dialogue,” said Robert Rostan, CFO and Principal of Training The Street, who trains employees of Wall Street firms on how to value companies. “But a short-term business to pay for a long-term commitment doesn’t work. If everything goes fine and we continue in this healthy economy, if we have another five or ten years of this, it may be fine. But we have this feeling that we’re in the 12th or 13th inning of a baseball game. When the downturn comes, this type of company is especially subject to risk.”

“Even at [a] $23 billion valuation, it’s hard to see how this IPO will be able to do well,” Hatem Dhiab, managing partner at wealth and investment management firm Gerber Kawasaki, said in a note to Fortune. “Growth is slowing, they are losing almost $2 billion a year. It is preposterous that they keep referring at themselves as a tech company because they just want tech valuations. On the heels of several botched IPOs, investors are finally being more rigid and disciplined when looking at so called disruptive businesses.”

In other words, investors are going to be demanding a whole lot more than cold brew on tap to warm up to We.