WeWork, a coworking giant once valued at $47 billion, will file for bankruptcy as soon as next week, The Wall Street Journal has reported. The information sank its shares more than 30% after the market closed, to $1.47 per share, leaving it with a valuation of less than $100 million.
The company had one of the most meteoric trajectories of the last startup boom. The New York-based firm launched in 2010, just as the venture capital market began a decade-long boom. In its early years, WeWork raised billions of dollars and grew rapidly, often doubling its revenue each year. In 2019, a round valued it at 47 billion dollars, about 45 billion euros, and had the support of the Japanese giant SoftBank.
In 2020 it planned to go public. There things began to go wrong. Shortly before starting to trade, the eccentricities of the expenses of the CEO, Adam Neumann, came to light, which caused a serious reputational crisis, postponed his jump to the stock market and ended up costing Neumann, co-founder, his job. Investors began to doubt the model. WeWork is dedicated to renting buildings on a long-term basis to renovate them and convert them into coworking spaces, renting them out on a shorter-term basis to other companies.
The pandemic emptied its buildings and sank the business, but it managed to survive it by relying on heavy debt. The IPO came in 2021, with a lower valuation and with SoftBank injecting billions to shore up the company, which continued to lose money. In the meantime, it has also been losing key executives.
Between the long-term net debt and the leases, there are obligations of 15,000 million dollars, about 14,200 million euros. Today, with the rise in rates, this financing has become very expensive and impossible to afford. On Monday he reached an agreement with creditors for a grace period that will end in seven days. The push for coworking has cooled and in June, according to the latest data, its buildings were 72% occupied, Bloomberg reports.
In a statement to the market this Tuesday, the company detailed that it has been holding talks with its creditors about "improving its balance sheet" and taking measures to "rationalize" its real estate portfolio. The company has "a clear, long-term vision for the future," a spokesperson told Bloomberg.
WeWork already raised "substantial doubts" about its ability to continue operations in August.
