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Despite delivering “solid year-over-year revenue growth and dramatic profitability improvements” in the latest quarter, WeWork, the world’s leading provider of flexible office and coworking space, was forced to issue the dreaded “going concern” warning alongside its earnings report this week, meaning that it could face bankruptcy unless it manages to improve liquidity and profitability over the next 12 months.
“As a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern,” the statement reads. As of June 30, WeWork had total liquidity of $680 million, compared to $2.9 billion in long-term debt and negative operating cashflow of $530 million in the first six months of 2023, leaving serious doubts about its ability to stay afloat over the next 12 months.
As our chart shows, WeWork’s losses have grown in line with its revenue, piling up to more than $15 billion since 2016. David Tolley, the company’s interim CEO, still tried to exude confidence in its latest earnings release. “We are confident in our ability to meet the evolving workplace needs of businesses of all sizes across sectors and geographies, and our long-term company vision remains unchanged,” Tolley said. “Although we have more work to do, the talent and energy of the WeWork team is extraordinary and we are resolutely focused on delivering for our members for the long term.”
In order to even exist in the long term, WeWork’s management is working on a four-point plan to improve liquidity and profitability in the short term, including reducing rent and tenancy costs, increasing revenue by reducing churn and acquiring new members, limiting expenses and raising new capital via issuance of debt, equity securities or asset sales.
This chart shows WeWork’s revenue and net losses since 2016.
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