WeWork Stock Plummets 50% After Impending Bankruptcy Reports

Trending 6 months ago

Topline

Shares of WeWork, nan struggling institution that erstwhile pioneered nan co-working agency abstraction movement, collapsed much than 50% connected Wednesday aft news reports revealed nan institution was readying to record for bankruptcy arsenic soon arsenic adjacent week.

A motion is photographed connected nan exterior of a WeWork agency connected October 07, 2019 successful San Francisco, ... [+] California. (Photo by Justin Sullivan/Getty Images)

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Key Facts

Wednesday’s stock value is simply a grounds debased for nan company, which was erstwhile a Wall Street favourite weighted astatine astir $47 billion.

WeWork’s stock value slumped to astir $1.12 conscionable aft 2 p.m. Wednesday afternoon, putting nan company’s marketplace capitalization astatine astir $59 million—less than 0.13% of what it was worthy astatine its highest successful 2019.

This comes aft nan Wall Street Journal, citing anonymous sources pinch knowledge of nan matter, first reported Tuesday that nan institution was readying to record for bankruptcy arsenic soon arsenic adjacent week.

WeWork reportedly missed liking payments it owed its bondholders connected October 2, which meant it had until nan extremity of a 30-day grace play to make nan payments aliases spell into default, according to nan Journal (However, connected Tuesday, WeWork and its bondholders struck a woody to springiness WeWork different 7 to discuss earlier a default is triggered).

Forbes has reached retired to WeWork for comment, and has not yet heard back.

Tangent

Tuesday’s bankruptcy revelation wasn’t nan first motion of problem for WeWork. In August, nan institution released a statement acknowledging location was “substantial doubt” it will beryllium capable to enactment successful business, citing a “slight diminution successful memberships” and “increasing competition.” The institution blamed nan existent property market, which has seen an summation successful supply, giving consumers much options. For nan six months ending successful June, nan institution reported a nett nonaccomplishment of $696 million. Additionally, nan institution saw turmoil connected its committee of board successful August erstwhile 3 board resigned complete a disagreement regarding governance and strategical direction, according to a securities filing.

Key Background

WeWork’s autumn from grace has been ongoing for years. It became nan sixth-most-valuable startup successful nan world successful 2017, and successful conscionable 3 months from July to September 2017, it raised $4.4 billion, according to Business Insider. By January 2019, it peaked pinch a valuation of $47 billion. However, nan Covid-19 pandemic, which emptied its shared offices successful outpouring 2020, and a difficult existent property marketplace wounded nan company’s bottommost statement and it ne'er afloat recovered.

Further Reading

WeWork May Declare Bankruptcy Next Week, Report Says (Forbes)

WeWork Says There’s ‘Substantial Doubt’ About Ability To Stay In Business (Forbes)

$47 cardinal to $280 million: What went incorrect astatine WeWork? (Forbes)

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