WeWork says it must correct financial statements

Problem for newly public company stems from misclassifying shares

Miami /
Dec.December 02, 2021 11:30 AM
WeWork CEO Sandeep Mathrani (Mathrani/Wikipemedia, Getty)

WeWork CEO Sandeep Mathrani (Mathrani/Wikipemedia, Getty)

WeWork’s life as a public company is off to a rough start.

The coworking firm said Wednesday it has to revise its financial statements for three quarters after finding that it misclassified some of its public shares. WeWork disclosed that it previously counted certain shares as permanent equity, but those shares should have been called temporary equity.

WeWork also said the company’s management concluded there “was a material weakness in internal control over financial reporting relating to the interpretation and accounting” for certain parts of its shares.

The company announced the news in a filing with the Securities and Exchange Commission on Wednesday afternoon. WeWork’s shares were down 5.2 percent to $8.46 in after-hours trading.

The announcement comes about a month after WeWork merged with BowX Acquisition Corp to go public through a special purpose acquisition company. The SPAC came two years after WeWork’s previous attempt at going public failed.

Under new leadership, the company is cutting costs and trying to carve a pathway to profitability. It is also distancing itself from co-founder Adam Neumann.

The misstatement, though, is a blow to WeWork’s bid for a new identity.

WeWork said in preparation of the financial statements through Sept. 30, it reevaluated an accounting classification of the Class A common stock issued as part of units sold in the IPO by the company’s predecessor, BowX Acquisition Corp. WeWork determined that the shares include “certain redemption features” that are “not solely within the company’s control” and thus should not have been classified as permanent equity.

The mischaracterization of these shares was included on BowX’s annual report filed in 2020 as well as two quarters of BowX’s financial statements and on WeWork’s third-quarter earnings report.

WeWork said those financial statements “should no longer be relied upon.”

Earlier this month, Neumann made his first public comments since his ouster and expressed “tremendous regret” over the way the failed public offering hit employees at the firm. During the company’s 2019 IPO attempt, it came to light that WeWork had substantial losses and numerous related-party transactions.


Related Articles

arrow_forward_ios
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
Kobi and Nancy Karp buy Walgreens-leased property in Delray Beach
New York, Miami, Chicago, Los Angeles, San Francisco and Chicago (iStock)
As rent explodes nationally, Miami tops the charts
As rent explodes nationally, Miami tops the charts
Alta Developers’ Raimundo Onetto in front of the development site (Google Maps)
Heading south: Alta buys dev site for apartment complex near Homestead
Heading south: Alta buys dev site for apartment complex near Homestead
Grant Cardone and a rendering of LAs Olas Walk (Cardone Capital, ZOM/McNeal Realty)
Grant Cardone to buy $750M in SoFla apartments
Grant Cardone to buy $750M in SoFla apartments
The current building on Dania Beach (Google Maps)
Shuttered Dania Beach waterfront restaurant could get new life as Lucky Fish
Shuttered Dania Beach waterfront restaurant could get new life as Lucky Fish
Jungle Island owner sells Jupiter office building to New York self storage firm for $12M
Jungle Island owner sells Jupiter office building to New York self storage firm for $12M
Jungle Island owner sells Jupiter office building to New York self storage firm for $12M
Arnaud Karsenti, managing principal of 13th Floor Investments (iStock, 13th Floor)
Brickell church votes to sell waterfront land to developer for condo tower
Brickell church votes to sell waterfront land to developer for condo tower
503 South Krome Avenue in Homestead and Armando Bravo (Google Maps)
Developer buys OZ land in bet on Homestead as “future” of real estate
Developer buys OZ land in bet on Homestead as “future” of real estate
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...