WeWork shares sink after warning of bankruptcy risk
Timilehin Adejumobi
1 min read
WeWork (WE.N) warned of a possible bankruptcy in a stunning reversal of fortune for the shared workspace provider that four years ago was one of the world’s most prized startups with a valuation of $47 billion.
The SoftBank-backed company, valued at just $446.8 million as of last close, has been in turmoil ever since it filed its IPO paperwork in 2019 as investors pointed out governance issues involving its then founder-CEO Adam Neumann.
The company went public in 2021 through a SPAC merger after abandoning its IPO plans, but the struggles continued as investors doubted its business model and clients moved to hybrid work since the pandemic.
WeWork’s business model involves taking long-term leases and renting out spaces for a short term.
“Fewer and fewer companies from mature large-cap businesses to startups are willing to enter into long-term leases for geographically fixed spaces,” Interim CEO David Tolley said in an investor call on Wednesday.
The company may need to consider strategic options, including raising more money or obtaining relief under the U.S. Bankruptcy Code, it said on Tuesday.
In March, WeWork had reached a deal to cut debt by about $1.5 billion and extend the date of some maturities to save cash.
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