(Bloomberg) -- Jefferies Financial Group Inc.’s earnings took a hit from an unlikely source: WeWork’s dropping valuation.
Third-quarter revenue came in below even the lowest analyst expectation Thursday as the company’s merchant banking unit wrote down the value of its investment in We Co. by $146 million. Net revenue fell slightly to $777 million despite increases in both fixed-income and equities trading, Jefferies said Thursday in a statement.
We, which was valued at $47 billion earlier this year, halted its initial public offering process last week as tepid demand meant it may have gone public at a valuation below $15 billion. It’s now likely to wait until 2020 to go public, Bloomberg reported this week.
Jefferies currently owns 0.8% of We’s diluted shares, and said it has already received $31 million in cash from its $9 million investment. Jefferies said the updated valuation was as of Aug. 31. It had previously said that its WeWork stake was worth $269 million as of May 31.
Equities trading revenue jumped 13% from a year earlier to $193 million, while fixed-income trading climbed 6% to $148 million. Investment banking fees fell 11% to $403 million.
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