WeWork, the company that revolutionized the traditional office ecosystem with its concept of flexible workspaces and collaborative economy, is now on the brink of bankruptcy, according to an analysis by El País.
Although it was once valued at USD$47 billion despite its constant losses, the company faced a significant setback when its initial public offering (IPO) plans failed in 2019, and its co-founder, Adam Neumann, was ousted by shareholders.
The Covid-19 pandemic and the unprecedented increase in remote work exacerbated WeWork’s problems.
The company couldn’t recover from this situation and is currently considering declaring bankruptcy next week, as reported by The Wall Street Journal.
Although WeWork denies it and labels it as speculation, its stocks plummeted at the opening of Wall Street.
In October, it couldn’t meet the interest payments on its debt, leading to discussions about selling assets, renegotiating lease contracts, and improving its financial situation.
After a 30-day grace period, the company announced an additional seven-day moratorium, during which it is expected to prepare its bankruptcy filing.
The value of WeWork’s shares collapsed, losing 44% when it opened on Wall Street, trading at USD$1.28 per share.
Since its failed IPO attempt in 2021, its stock price has fallen by 99.7%, leaving its value at just USD$60 million.
Softbank, the Japanese company that was a major investor in WeWork, has suffered significant losses.
In the past three years, WeWork accumulated losses of USD$9.6 billion, exceeding its revenues during the same period.
Despite efforts to reduce losses in the first half of 2023, WeWork remains in a financially challenging situation, with debts exceeding the value of its assets and a negative equity of USD$3.718 billion at the end of June.
The company is in technical bankruptcy, and its business continues to struggle.
Meanwhile, co-founder Adam Neumann has embarked on a new project: Flow. This aims to revolutionize the rental market for flats and apartments in the United States.
His new company has received a significant investment of USD$350 million from Marc Andreessen, a Silicon Valley investor.