WeWork is warning of bankruptcy risk after losing $700 million in net worth in 2023

“Our losses and negative cash flow from operating activities cast significant doubt on our ability to continue as a going concern,” WeWork said in the filing. in accounting term “Cares about” It means that the company has enough resources to stay afloat. The company reported $2.9 billion in long-term debt as of June 30.

WeWork said that if its situation does not improve, it will have to consider options such as selling assets, reducing business activities, and “obtaining relief under US Bankruptcy Law,” according to the filing. Its stock traded for less than $1 for several months and closed at approx 21 cents late Tuesday.

“People who have been following the company have been anticipating this for a while,” said Eric Gordon, a professor at the University of Michigan’s Stephen M. Ross School of Business. “The clock is ticking at WeWork.”

In a statement released on Tuesday, the company struck an optimistic tone, emphasizing that it was able to increase its revenue in the second quarter by 4 percent year over year. It added that it is focused on increasing membership, improving the terms of its real estate portfolio and reducing operating costs, and that its 777 locations worldwide are occupied in pre-pandemic levels.

WeWork suggests post-coronavirus changes to shared office layouts

Since its founding in 2010, WeWork has experienced such dramatic ups and downs that it has become the subject of numerous books and academic case studies, as well as documentary And a fictional series on Camel.

Some experts, like Gordon, say the company’s basic business model—rent out office space, trick it out with beanbag chairs and free beer, and then rent it back out—isn’t revolutionary. But the brand has made a name for itself with its deftly charming investors, including SoftBank founder and CEO Masayoshi Son, who has poured billions of dollars into the company — only to call the investment later. “stupid.”

“They were brilliant at creating an aura of being the next big thing, but they weren’t very successful financially,” Gordon said.

WeWork Released to the public in October 2021 After her first attempt to do so collapsed two years ago. Investors became increasingly concerned about the erratic behavior and extravagant spending of CEO and co-founder Adam Neumann, which led to his resignation in 2019.

The coronavirus pandemic has added to the company’s woes, with many white-collar employees still choosing home offices over spaces in WeWork-managed offices or locations — which Newman once described. “The world’s first real social network.”

Vacancies passed in the United States 20 percent Early this year, according to real estate services company JLL, and researchers at Columbia University is found A 45 percent drop in office values ​​in 2020, with little recovery expected in the coming years.

WeWork has yet to appoint a permanent CEO since Neumann’s departure.