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Less than three months after WeWork, the world’s leading provider of flexible office and coworking space, was forced to issue the dreaded “going concern” warning alongside its latest earnings report, the company is reportedly on the verge of bankruptcy. Citing people familiar with the matter, the Wall Street Journal reported last Tuesday that New York-based WeWork is considering filing a Chapter 11 petition in New Jersey this week.
“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 company had announced in August. 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. In the company’s latest and possibly last earnings release, David Tolley, the company’s interim CEO, had still tried to exude confidence, saying: “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. 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 had started 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. All to no avail, it seems. On Monday morning, WeWork shares were halted pending news of its apparently imminent bankruptcy filing.
This chart shows WeWork’s revenue and net losses since 2016.
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