Many indications suggest that WeWork may file for bankruptcy as early as next week. The company, supported by SoftBank Group, is struggling with massive debt and large losses - reports Reuters.
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WeWork declined to comment on the potential bankruptcy. Despite this, in the face of these reports on Wednesday, November 1, the company's stock price fell by over 50% during the day, eventually ending at $1.22 - the lowest in history at closing prices. Since the beginning of 2023, the company's share price has fallen by 97.8%, giving it a current market capitalization of just under $65 million.
If WeWork were to file for bankruptcy, it would be a spectacular failure for investors, particularly Japan's SoftBank, which has pumped a total of $18.5 billion into the startup since 2017. As a result, when WeWork was preparing for its IPO in 2019, its valuation reached a peak of $47 billion. However, the market then lost illusions about the profitability of the company's business model and its troubles began.
Despite the mounting problems, WeWork made its stock market debut in 2021, but by then the company's situation was dire - its value was $9 billion, just one-fifth of the original valuation. Even subsequent rescue actions and substantial investments from the aforementioned SoftBank did not help - the startup's debts were growing and its value was decreasing.
In early August 2023, WeWork published internal financial reports for the first two quarters of 2023, illustrating the scale of the disaster. The company's current long-term liabilities amount to $13.3 billion in office space rental costs and $2.9 billion in debt. Already then, the first signals of a possible collapse of the entire company were amplified by the departures of high-level directors, led by CEO Sandeep Mathrani.
We wrote more about the fall of WeWork in the article below.
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