WeWork, the renowned multinational company for renting offices and coworking spaces, announced that it lost $695 million in the first six months of the year despite having increased its revenue by 7.2% year-on-year, to $1,693 million. In this framework, its shares fell 33% in Wall Street whose price reaches a new historical minimum in its listing. The company it had debuted on the stock market about two years ago, in October 2021. Since then its market capitalization has been almost completely erased.
“In a difficult operating environment, we have achieved solid year-on-year revenue growth and notable improvement in profitability,” defended the company’s interim CEO, David Tolley, in the results statement.
The same company warned that there is “substantial doubt” about the ability to continue as a going concern. “As a result of the company’s losses and projected cash needs, combined with increased member turnover and liquidity levels, there is a substantial doubt about the ability of the company to continue as a going concern”, admitted the multinational when presenting its accounts for the second quarter.
In this sense, WeWork argued that its ability to continue as a going concern depends on the successful execution of the plan to improve liquidity and the profitability of the company in the next 12 months, including a reduction in rental and leasing costs through restructuring measures and the negotiation of more favorable conditions.
Likewise, the multinational pointed out the need to increase its revenue by reducing member turnover and increase sales, as well as control expenses and limit investment, while seeking to raise additional capital through the issuance of debt or equity securities or through the sale of assets.
The rise and near-fall of WeWork
WeWork managed to be one of the most valuable companies in the US. Venture capital firms fueled their rise with billions of dollars to rent real estate around the world and lease it back to workers.
The covid-19 pandemic had a full impact on the company. The WeWork offices, which were emptied during the first months of the health emergency, showed a slow progress towards replenishment in the last year. But the recovery seems so far unsustainable.
“As of June 30, 2023, the consolidated real estate portfolio of WeWork consisted of 610 locations in 33 countrieswhich supported approximately 715,000 workstations and 512,000 physical memberships, which is equivalent to a physical occupancy of 72%, and a decrease in physical memberships of 3% year-on-year,” the company said in its statement.
As if this were not enough, the New York-based company has also undergone a change in leadership. Sandeep Mathrani, who took over as CEO in early 2020, left in May to become a partner at venture capital firm Sycamore Partners. That is why WeWork currently has an interim CEO.
Source: Ambito
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