WeWork has sounded the alarm on its capacity to remain in business, sparking speculation about the workspace-sharing company’s future.
WeWork stated last week that there was “substantial doubt” about the New York-based company’s “ability to continue as a going concern” WeWork cited, among other factors, increased member churn, financial losses, and the company’s need for funds over the next year.
In an effort to preserve its listing on the New York Stock Exchange, the company announced on Friday that it would proceed with a 1-for-40 reverse stock split.
The value of WeWork shares has plummeted since the company went public in October 2021, following a spectacular failure during its first attempt to do so two years earlier — which resulted in the dismissal of its CEO and co-founder, Adam Neumann.
WeWork was once valued at $47 billion, but investors began to lose interest due to Neumann’s erratic behavior and excessive spending.
Since Neumann’s departure, WeWork has made significant efforts to turn the company around, with executives citing improved annual revenue, significant reductions in operating costs, and other growth opportunities as workplaces emerge from the COVID-19 pandemic.
Nonetheless, according to specialists, there is a possibility of bankruptcy, which raises concerns regarding the already deteriorating office real estate industry.