WeWork’s parent company is exploring a dramatic reduction in its valuation as it aims to go public while facing widespread skepticism over its business model and corporate governance, according to people familiar with the company’s listing plans and its recent talks with major investors.

We Co. is considering putting a price tag on its initial public offering that would value the company somewhere in the $20 billion range, potentially at the low end. That is less than half of the $47 billion mark where it last raised private...