WeWork is a well-known flexible workspace provider and co-working company. It was founded in 2010 by Adam Neumann, Miguel McKelvey and Rebekah Neumann. It offers shared office space, community amenities, and services for businesses and individuals. WeWork's spaces are known for their modern and stylish design, providing a collaborative and community-focused environment for its members. With this model, the company has quickly expanded globally and has become one of the biggest players in the co-working industry.
Rising Star
Just four years after its founding, WeWork was valued at $4.6 billion. It has attracted a number of large investors such as JP Morgan, Goldman Sachs, Wellington Management and others. However, CEO Adam Neumann, who had no experience in money management, started spending his money uncontrollably, which caused investors to worry in 2016 whether the company could maintain its value, and if so, for how long. Nevertheless, SoftBank decided to invest $4.4 billion in 2017, which shot the value of WeWork's funding to $20 billion.
Turnaround situation
Despite the good news from investors, the situation began to take a turn for the worse in 2018 when the company faced vocal protests from its employees. They had to eat only plant-based meals to help the environment, while Neumann bought a private jet for $60 million. But that didn't stop SoftBank from pumping another US$2 billion into WeWork, helping it reach a value of US$47 billion. But everything started to fall apart in late 2019.
One failure after another
After the failed IPO, public investors turned against the company, which later caused Neumann to step down as CEO in 2019. And if that wasn't enough, there were reports of the presence of cancer-causing formaldehyde in the offices. At this point, the company was forced to reach for a lifeline from SoftBank, which took control of it from its position as a major investor. Then came the COVID-19 pandemic and the whole world was plunged into restrictions in the form of dlockdowns. WeWork could no longer function. Investors decided to file a class action lawsuit against the company because they felt it had overreacted to its business plan.
A glimmer of hope
The year 2021 showed a bit of hope for the company, after Sandeep Mathrani took charge in 2020, costs were reduced by more than $1 billion, which improved cash flow. This meant WeWork was able to sign leases again, signing the most leases since 2019.[2]
The beginning of the end
The company's stock plunged nearly 50 percent to an all-time low after news reports indicated the flexible workspace provider could file for bankruptcy.* The New York-based company has struggled in recent years with significant debt and substantial losses. Despite going public in 2021 at a significantly reduced value, the ongoing problems represented a significant setback for SoftBank, which invested billions in rescue efforts, as the startup never achieved profitability.
Bankruptcy
More recently, WeWork decided not to make interest payments on senior notes due in 2025, despite having the necessary funds to do so, warning of a possible bankruptcy back in August. The price per share reached an all-time low of $1.18, marking a 96-percent loss in value this year, and has fallen further. *[3] With 92 percent of creditors not agreeing to the restructuring option, WeWork finally declared bankruptcy for good on Monday, November 6, 2023.
WeWork's share price performance since launch (Source: Google Finance) *
* Past performance is no guarantee of future results.
Olivia Lacenova, principal analyst at Wonderinterest Trading Ltd.
[1] https://companiesmarketcap.com/wework/marketcap/
