WeWork shares plummeted by almost a quarter after the company announced a possible business closure

WeWork coworking service in its financial reporting for the first half of 2023 expressed doubts that the company will be able to continue its activities. Immediately after that, the quotes of his shares collapsed by 24%.

“Given the company’s losses and projected cash requirements, combined with increased churn and current levels of liquidity, there are significant doubts about the company’s ability to continue as a going concern,” WeWork said in a press release. implementation of management’s plan to improve liquidity and profitability over the next 12 months.

At the end of the second quarter, WeWork’s revenue grew by 4% year on year, to $844 million, and by the end of the half year – by 7%, to $1.69 billion. Net loss decreased in six months from $1.14 billion to $696 million. And space occupancy has grown from 70% in the second quarter of 2022 to the current 72%. However, the company notes that all this is still not enough to cope with the debt burden that has accumulated in recent years. WeWork now has $3.6 billion in debt that exceeds the value of all of the company’s assets. And the liquidity cushion is only $680 million. Management wants to achieve debt restructuring and renegotiation of current loans, and also intends to further reduce costs.

If the situation does not improve, as the company said, it will have to consider options such as selling assets, reducing business activity and “obtaining benefits under the US bankruptcy code.”

Kirill Sarkhanyants