A few minutes every morning is all you need.
Stay up to date on the world's Headlines and Human Stories. It's fun, it's factual, it's fluff-free.
WeWork used to be the shared workspace of the future – now it’s stuck in the past. On Tuesday, the company filed a report with the US Securities and Exchange Commission (SEC) saying, “Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern.” Is WeWork about to go bankrupt less than five years after it was dominating the startup conversation?
Founded in 2010 by Adam Neumann and Miguel McKelvey, WeWork quickly blew up in popularity. The original idea behind the business was to lease larger office spaces, renting out smaller parts of them to customers. At this time in the 2010s, venture capitalists were dumping money into startups that showed lots of growth potential – less concerned about actual profits.
In January 2019, the company's potential valuation was at US$47 billion, and in August 2019, WeWork filed for its IPO. But, by that September, its valuation had dropped to US$10 billion. When it originally published its finances in 2019, WeWork was criticized for its spending and the sus behavior of its CEO, co-founder Adam Neumann. WeWork didn’t actually end up going public at the time; Softbank put together a US$5 billion financing package and took majority control of the company instead. Neumann stepped down from his role.
In February 2020, a new CEO took over – Sandeep Mathrani. He was hoping to get the company back on track, but, well, 2020 wasn't a great year for commercial real estate, to put it lightly. Occupancy dropped 46% at its lowest. In 2021, the company did finally make it public after a merger, but the COVID pandemic had made the idea of a shared coworking space not super appealing to a lot of people. The hybrid work model had taken over, and WeWork’s business model gave investors serious doubts.
Since then, WeWork’s quarterly losses have been adding up.
"Fewer and fewer companies from mature large-cap businesses to startups are willing to enter into long-term leases for geographically fixed spaces," explained current Interim CEO David Tolley in an investor call on Wednesday.
As of now, WeWork has never turned a profit, most recently valued at US$446.8 million.