WeWork is warning there’s “substantial doubt” about its ability to stay in business over the next year because of its financial losses and its need for cash, among other factors.
The New York-based workspace-sharing company said on Tuesday its ability to stay in operation is contingent upon its ability to improve its liquidity and profitability over the next 12 months.
WeWork went public in October 2021 after a spectacular collapse during its first attempt to do so two years earlier — which led to the ousting of its CEO and founder, Adam Neumann.
The company was valued at $USD47 billion in 2019 (about $84 billion in today’s Australian dollars) before investors started to drop off due to Neumann’s erratic behaviour and exorbitant spending.
The company leases buildings and divides them into office spaces to sublet to its members, which include small businesses, startups and freelancers who want to avoid paying for permanent office space.
But over time its operating expenses soared and it relied on repeated cash infusions from private investors.
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The company also said on Tuesday it is facing high member turnover rates. It said it plans to negotiate more favourable lease terms, control spending and seek additional capital by issuing debt, stock or selling assets.
WeWork’s interim CEO, David Tolley, sounded an optimistic note on Tuesday in the company’s results for the second quarter, during which it lost $349 million.
“The company’s transformation continues at pace, with a laser focus on member retention and growth, doubling down on our real estate portfolio optimisation efforts, and maintaining a disciplined approach to reducing operating costs,” Tolley said.
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