Reuters and Wall Street Journal are reporting that WeWork will file for bankruptcy next week.
WeWork’s shares were down 49.7% in early morning trading on Wednesday, bringing its market capitalization to just $61 million. That’s a ludicrous drop considering this company raised more than $7.09 billion in equity capital while private.
Three months ago, I had predicted with 98% certainty that WeWork would file for bankruptcy before the end of 2024 on the public prediction website Metaculus. In August, WeWork warned they had doubts about not being able to continue as a going concern. This means they thought WeWork could go bankrupt. My 98% certainty was that the management of WeWork was absolutely right that they would go bankrupt.
Last month, WeWork missed interest payments to its bondholders and was granted 30 days to make them, according to a securities filing.
The company was founded in 2010 and is headquarted in New York City. In 2018, WeWork managed 46.63 million square feet of commercial real estate.
In 2019, WeWork attempted to go public in an IPO, seeking a valuation as high as $47 billion. However, concerns about corporate governance and the company’s $47 billion in lease obligations led to a dramatic reduction in the company’s proposed IPO valuation, which fell to as low as $10 billion. The CEO of the company resigned at the request of existing investors. Ultimately, the company filed to withdraw its IPO prospectus.
The company remains unprofitable, and had losses of nearly $2 billion in 2018. In 2023, WeWork reported a net loss of nearly $700 million in the first six months. This was after recording $10.7 billion in net losses over the previous three years.
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
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The founder leasing the branding back to the company was an evil genius unethical life pro tip move too.
The fundamental concept of workshare spaces in urban centers and high density residential areas wasn’t wrong in the internet area per se.
Just that WeWork had a lot of shenanigans going on internally as is common with any seedy silicon valley startup.
Whether COVID was the straw that broke the workshare market, or the real estate financial gaming, it’s hard to say.
For a target market of highly physically mobile white collars workers, or workers who do not really “live” in their homes/apartments (or simply lack the space for a proper home office), workshare spaces meet their needs.
Trying to be startup pseudo-incubators, and needing the profits to match VC investment, was not such a great idea, especially as a national chain. If you look at Regus or similar services, they are more high end sales support centers (think tarted up kinko’s shops) that depended on a less profitable but more stable business model (and higher-end clientele).
As always, internet startups trying to do non-internet things face an uphill battle.