WeWork reported that there is “substantial doubt” the company will be able to stay in business, citing a “slight decline in memberships” and “increasing competition.”
They indicate that avoiding bankruptcy is “contingent upon successful execution of management’s plan to improve liquidity and profitability over the next 12 months.”
In March 2016, WeWork raised $430 million in financing from Legend Holdings and Hony Capital, valuing the company at $16 billion. Japan’s investment conglomerate SoftBank put nearly $20 billion into WeWork to date and valued Wework at a peak valuation of $47 billion valuation prior to its failed attempt at an initial public offering in 2019.
WeWork reports that is near bankrupcy.
In March, 2023, the CEO and CFO resigned after massive losses were reported.
Consolidated revenue for the second quarter 2023 was $844 million, an increase of 4% year-over-year and up 7% for the first half 2023 year-over-year.
Net loss was $(397) million, a $238 million improvement year-over-year, and an improvement of $443 million for the first half 2023 year-over-year.
Liquidity
On May 5, 2023, the Company closed on its previously announced debt exchange and restructuring transactions. As of June 30, 2023, the Company had $680 million of liquidity, consisting of $205 million of cash and $475 million of capacity under its delayed draw, first lien notes, of which $175 million were drawn in July 2023.
In addition, as disclosed in WeWork’s Quarterly Report for the three and six months ended June 30, 2023 (the “Second Quarter 10-Q”).
Space-as-a-Service:
As of June 30, 2023, WeWork’s systemwide real estate portfolio consisted of 777 locations across 39 countries, supporting approximately 906,000 workstations and 653,000 physical memberships, equating to physical occupancy of 72%, and a decrease in physical memberships of 1% year-over-year.
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Good Riddance to a noble concept poorly-executed.
Rampant hidden/ untraceable/ debatable fees charged to your locked down (active payment system locked on their server) payment method without easy online/direct number access, poor in-location tech support, and utterly oblivious and quiet-quitting reception/admin staff. It was a rotten business model trying to mix the best of hotel/hospitality and upscale work landlord in a pretty, local-neighborhood hipster ‘shell’, but executed as a worst of both worlds with none of the service and all of the absent-landlord-conflict.
Luckily, many local commercial landlords are offering similar services at a fraction of the price, without commitment or ‘on-file’ credit card/bank account requirements.
That being said, the majority of the users/clients/customers were wifi vultures, questionably valid numbered businesses, brutal work personalities (just think of the most obnoxious/ disgusting cubicle mates you have ever had), and a less-than-productive ‘work’ environment (think internet cafes).
So appealing in concept, so trashed by the reality of the city people in this World. Ho-hum.
I saw a video on them years ago, a “this business: what went wrong?” variety, and it echoed pretty much everything here, an presaged what happened recently.
I do not get, what do they do exactly?
The article subheader “Space-as-a-Service:” should be read as “Office-Space-as-a-Service” and you’ll get the idea.
Per a quick google they started with wildly optimistic projections of the market for outsourcing any companies’ office work to a global network of “WeWork” office sites on the cheap.
Given the owner class and their love of outsourcing those must have been some hella outrageous overprojections.
Then, again via google, the prime mover turned out to be a profligate spendthrift who provided less-than-ideal work environments.
He got ousted (bought off) by Sofbank and they’ve been trying to make it work since… but it’s now a worker’s market and neither the companies or the gig workers are interested in what WeWork has to offer.
They were quite successful in the startup space for a while, but the market has shifted since (to add on top of the management and other problems at WeWork). More remote and hybrid work models since covid, for example, so less demand for offices.
Right, I was looking for references to satellite platforms and launch operations and thought it was some kind of scam. Now, it all makes sense.
There is another company called Regis that does the same thing. At the peak of the hype, when WeWork was valued at $47B, Regis, which was about the same size and profitability, was valued at $5B. This alone tells me WeWork was mostly hype through and through and never represented a legitimately successful company.
Maybe Regus? I once worked at a company which hired out office space from them. Even then (2006–2009) it wasn’t a terribly profitable business, and we eventually left to work from home — a bit of a preview of what was to happen ten years later in a much larger scale.
Yes, Regus. In any case, WeWork did not do anything more than Regus. Yet their market value was 10X greater due to nothing more than pure hype.