WeWork warns end may be near

Company admits “substantial doubt” over future; next 12 months will decide fate

WeWork Admits “Substantial Doubt” About its Future
WeWork's David Tolley (LinkedIn, WeWork, Getty)

WeWork on Tuesday acknowledged ”substantial doubt” about whether it can continue operating, citing a high level of membership cancellations and a shortage of cash.

The co-working giant told investors that the next 12 months will make or break the company as it seeks to cut expenses, renegotiate lease terms, grow membership and raise new capital.

Interim CEO David Tolley blamed “excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility” for the decline in memberships.

News of its possible implosion comes less than three months after Sandeep Mathrani left the company as CEO. “I am firm in my belief that this is WeWork’s moment,” he said at the time.

The company’s stock price fell below 20 cents per share in after-hours trading Tuesday, down from a high of more than $13 shortly after WeWork went public in October 2021.

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WeWork has lost a staggering $11.4 billion since 2020, according to the company. Merely operating the business has burned $4 billion in cash over that period.

The situation complicates WeWork’s effort to remain listed on the New York Stock Exchange, a status which makes it easier to raise money from investors.

Until his exit in May, Mathrani had led a restructuring at WeWork with its main investor, Japan’s SoftBank, to eliminate $2.3 billion in expenses and over $1 billion in debt. However, WeWork’s creditworthiness was downgraded following the restructuring because ratings agency S&P Global said it lacked confidence in the company’s ability to make good on its new financial commitments, which included extending the maturity of $1.6 billion in debt by another two years, to 2027.

WeWork’s board continues to search for Mathrani’s permanent replacement while Tolley, a board member, serves as interim CEO.

Less than five years ago, WeWork was on top of the world as it grew like gangbusters under charismatic CEO and co-founder Adam Neumann. But its bid for an IPO revealed self-dealing by Neumann and raised questions about its business model, triggering an epic collapse from a business valued at $47 billion by its private owners to one struggling to survive. It has yet to earn a profit.

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