WeWork shares plummet as company says it has 'substantial doubt' about future

WeWork shares plummeted more than 38 per cent in extended trading after citing sustained losses and cancelled memberships to its office spaces. The co-working business, which had a $47 billion valuation four years ago, has said it has “substantial doubt” about its ability to continue operating. Over the next 12 months the company will focus on reducing rental costs, negotiating more favourable leases, increasing revenue and raising capital, it said on Tuesday. The warning comes mere months after WeWork struck a deal with some of its biggest creditors and SoftBank to cut its debt load by around $1.5 billion and extend other maturities. Its bonds trade at deeply distressed levels. The company’s 7.875 per cent unsecured notes due 2025 last changed hands for 33.5 cents on the dollar, according to data from Trace. Just a few years ago, WeWork was one of America’s most valuable start-ups. Venture capitalists fuelled its rise with billions of dollars to rent office property around the world and lease it back to workers. The co-founder Adam Neumann led a disastrous attempt at an initial public offering in 2019, resulting in his removal as chief executive and necessitating a financial rescue from its major backer, SoftBank Group. The Covid-19 pandemic dealt another blow. WeWork’s office locations, which emptied during the early months of the health emergency, were showing slow progress towards filling back up over the last year. But the recovery appears so far to be unsustainable. WeWork said occupancy had dropped in the second quarter compared to the previous quarter. The New York-based company has also been weathering a change in leadership. Sandeep Mathrani, who took over as chief executive in early 2020, left in May to become a partner at private equity firm Sycamore Partners. WeWork currently has an interim chief executive. On Tuesday, WeWork said three of its independent board members were being replaced by four new board members.

WeWork shares plummet as company says it has 'substantial doubt' about future

Stock price of co-working business valued at $47bn four years ago fell more than 38% in after hours trading