NEW YORK CITY, New York: In a reversal of fortune for a co-working startup that was once valued at $47 billion, this week the value of WeWork shares plunged to near zero after the company warned it could go bankrupt.
Since its plans to go public in 2019 failed due to heavy losses, corporate governance issues and the controversial actions of founder and former CEO Adam Neumann, the SoftBank-backed company has struggled.
Despite its major backer, Japanese conglomerate SoftBank, investing tens of billions of dollars to prop up the startup, WeWork has continued to lose money.
“WeWork was perhaps the most overhyped startup of recent years,” noted Steve Clayton, head of equity funds at Hargreaves Lansdown, as quoted by Reuters.
This week, shares of the company closed 38.5 percent lower at 12 cents.
Since its debut through a blank-check merger in October 2021, WeWork’s shares have lost nearly all of their value, and were trading this week at 13 cents for a valuation of roughly $260 million.
Many of the company’s executives have since departed, including CEO Sandeep Mathrani in May and three board members this week.
WeWork said it is searching for a new CEO.
Under its business model, the company took long-term leases and rented out spaces for short-term contracts. After expanding for several years, the COVID-19 pandemic made shared office space less popular, leading to the company’s decline.
This week, interim CEO David Tolley said, “Fewer and fewer companies from mature large-cap businesses to startups are willing to enter into long-term leases for geographically fixed spaces,” as reported by Reuters.
In March, WeWork reached a deal to cut debt by some $1.5 billion and extend the date of some maturities.
Still, BTIG analysts, who downgraded the stock to “neutral,” said, “Flexible workspaces have a future in the office ecosystem, but WeWork, in its
current state, may not.”
https://www.bignewsnetwork.com/news/273929575/from-47-billion-to-zero-wework-shares-collapse?utm_source=feeds.bignewsnetwork.com&utm_medium=referral From $47 billion to zero, WeWork shares collapse