Shares in the troubled office-sharing firm WeWork https://www.wework.com plunged on 01 November 2023, following reports it could file for bankruptcy as early as next week. Its shares fell by more than 50% in early trade in New York. The firm was once seen as the future of the office. But it has been plagued by problems, including a disastrous attempt in 2019 to sell shares to the public and the exit of its co-founder.[1]
WeWork Inc. is/was a provider of co-working spaces, including physical and virtual shared spaces, headquartered in New York City. As of 31 December 2022, the company operated 43.9 million square feet of space, including 18.3 million square feet in the United States and Canada, in 779 locations in 39 countries, and had 547,000 members, with a weighted average commitment term of 19 months.
The company was also hit hard by the pandemic as more people started working from home. WeWork is considering filing for bankruptcy in New Jersey, according to the Wall Street Journal, which first reported the story. In response to the reports, a WeWork spokesperson said: "We do not comment on speculation."
Earlier on 31 October 2023, the company spokesman told the US financial regulator it had agreed with creditors to temporarily postpone payments for some of its debt. Investment firm Rathbones told reporters that WeWork had been "a great idea" when it started out. "We all know that flexible working and being able to use offices on an ad-hoc basis is a helpful opportunity to have," it said. "But I think the problem with WeWork was it over-expanded, borrowed too much money, took on too many sites too quickly, didn't really put in place all the checks and balances and controls that a company needs to have." Rathbones added that WeWork had also been hit by the rise in interest rates, which made borrowing more expensive.
The New York-based firm has been struggling since its initial attempt to sell shares on the stock market collapsed in 2019 due to concerns about its debts, losses and management. A week before the company confirmed that its share sale had been scrapped founder Adam Neumann stepped down as chief executive. A few months after the listing debacle, the pandemic hit, sparking a revolution in remote work and exposing WeWork to blistering public criticism from tenants looking to escape their leases. But the company kept operating, as executives sold off ancillary businesses, cut jobs and cancelled or modified hundreds of leases, trying to stem the firm's losses before it ran out of money.
WeWork finally listed on the New York Stock Exchange in 2021 with a much lower valuation. The Japanese conglomerate SoftBank has pumped tens of billions of dollars into WeWork as it continued to lose money.
The firm, which was valued at roughly US $47 Billion at its height in early 2019, has lost almost 98% of its stock market valuation in the last year. In August 2023, WeWork raised "substantial doubt" about its ability to continue operations. At the time, the company said in a statement that it faced challenges including softer demand and a "difficult" operating environment. It has also seen the exit of several top executives this year, including CEO and Chairman Sandeep Mathrani. As of the end of June 2023 WeWork had 777 locations in 39 countries around the world, according to the company spokesman.
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