WeWork, a shared workspace provider, has warned its investors in a recent Securities and Exchange Commission (SEC) filing that it could go bankrupt. However, WeWork’s bankruptcy warning would not affect its Indian division.
Shares of the one-time startup darling, once valued at $47 billion, have reached nearly zero after the announcement, falling 38.5%. The scrip closed the trading session at 13 cents, making the company’s market capitalisation roughly $275 million.
After scraping its IPO plans, the company went public in October 2021 through a Special Purpose Acquisition Company (SPAC) merger. Its shares closed the debut day at a price of $11.78 apiece.
It has been in turmoil since it filed its IPO paperwork in 2019 due to corporate governance lapses and the management style of the then-founder-CEO Adam Neumann. One of the major investors in WeWork, SoftBank, has sunk tens of billions of dollars to support the startup but continues to lose money.
It is believed to be one of the most hyped startups of recent times. It is suffering from hefty losses and is yet to churn a profit. In the April-June quarter, the company’s net loss narrowed to $349 million in the second quarter from $577 million a year ago, helped by cost cuts. It still managed to burn through $646 million in cash in just the first half of 2023. As of the end of June, the company had $205 million cash in hand.
Several executives, including CEO Sandeep Mathrani, Board chairman Daniel Hurwitz, and two board members, have recently left the company because of “a material disagreement regarding Board governance and the Company’s strategic and tactical direction.”