Is WeWork Going out of Business? Company Warns Ability to Continue Is ‘Going Concern’

Key takeaways

• WeWork has “substantial doubt about [its] ability to continue as a going concern”
• The coworking space start-up was valued at $40 billion at its peak, but is now worth less than $500 million
• WeWork shares plunged even further at the news, closing on Wednesday at 13 cents

Coworking office company WeWork is on the brink of bankruptcy, it’s warned markets. Once a darling of the markets, the pandemic and economic downturn has left the start-up struggling to find a way forward as debt mounts and cash flows dwindle. Can WeWork still turn things around, or is it time up for the coworking business? Let’s dive in.

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Is WeWork shutting down?

WeWork suffered a spectacular fall from grace after it revealed that not all was as it seemed with disgraced founder Adam Neumann and WeWork’s financials, highlighting excessive spending within the company, becoming a laughing stock and even featuring as the star of an Apple+ TV show.

At one point, SoftBank valued WeWork at $40 billion ahead of its IPO. Now? It’s worth just $500 million. To make things worse, the company is hemorrhaging money. The first half of the year saw a net loss of $700 million for WeWork after losing $2.3 billion in 2022. While WeWork’s liquidity is $680 million, the company has nearly $3 billion in long-term debt.

“If we are not successful in improving our liquidity position and the profitability of our operations, we may need to consider all strategic alternatives,” the company said.

WeWork currently has no CEO after Sandeep Mathrani departed in May, and three board members just quit. It’s definitely not looking good.

WeWork’s stock performance

The WeWork IPO eventually went ahead in 2021 but as a merger with a special purpose acquisition company (SPAC). With the company’s reputation in tatters, the stock has performed dismally and has been trading below $1 since March.

The share plummeted even further at yesterday’s warning bell, reaching a low of 13 cents. The stock has recovered to 21 cents during Thursday trading, but it’s far from the company’s glory days.

The bottom line

WeWork needs to fix its revenue crisis and sort out its debt, but without a CEO, executives leaving and a commercial property downturn, the company needs a miracle if it’s going to recover.

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