Business
WeWork Near Collapse - Stock Plummets 95%
By Jake Beardslee · August 9, 2023
In brief…
- WeWork stock plunged to just 16 cents per share Wednesday after the company posted a $397 million loss for Q2 2023.
- Management warned of "substantial doubt" about the company's ability to continue operating.
- WeWork has struggled since its failed 2019 IPO attempt, when co-founder Adam Neumann resigned amid revelations over his questionable leadership and inflated valuation of the company.
- Once valued at $47 billion with 850 global locations in 2019, WeWork's market value is now $335 million.
Shares of WeWork, the office-space leasing company once valued at $47 billion, crashed to just pennies today after the company warned that “substantial doubt exists” over its ability to continue operating.
The co-working pioneer founded by Israeli businessman Adam Neumann reported a $397 million net loss for the second quarter ending June 30. WeWork’s stock plummeted another 25% Wednesday morning, slashing its market value to $335 million. The company’s share price has tanked more than 95% since it went public in 2021.
“Excess supply in commercial real estate, increasing competition and macroeconomic volatility” were to blame for WeWork’s poor performance, according to interim CEO David Tolley These factors drove down rental revenues more than expected, Tolley told the New York Post.
In the report, WeWork’s management stated, “As a result of our losses… substantial doubt exists about the company’s ability to continue as a going concern.” The company’s future now depends “upon successful execution of management’s intended plan over the next 12 months.”
WeWork has struggled since its failed IPO attempt in 2019, when co-founder Adam Neumann came under fire for questionable leadership and selling nearly 30% of the company’s equity to SoftBank at an alleged inflated price. At its pre-pandemic peak, WeWork was valued at $47 billion after SoftBank invested.
Revelations arose that Neumann cultivated an unprofessional workplace environment at WeWork where drug and alcohol use was commonplace, according to reports. These factors, along with accusations of alleged financial self dealing by Neumann, caused investors to pull out of the planned IPO, ultimately forcing Neumann to step down as CEO. Despite the accusations and controversy, Neumann left the company as a billionaire.