The end of WeWork? Workspace provider goes from $47B valuation to brink of bankruptcy

WeWork on Tuesday raised "substantial" doubt about its ability to continue as a going concern and said three board members had stepped down, sending its shares down 33% in extended trading.

The workspace provider also issued a warning that its management needed to raise additional capital to keep the company afloat and maintain liquidity over the next 12 months.

WeWork in Japan.

The company had previously said its actions to restructure debt and operations had eased worries over its ability to continue as a going concern. It announced on Tuesday a net loss of $397 million for the second quarter on revenue of $877 million. WeWork’s closed with a mere market cap of $166 million on Tuesday, which dropped further after hours. WeWork peaked at a value of $47 billion after raising $1 billion in a Series H led by SoftBank in January 2019.

WeWork, founded by Israeli Adam Neumann who left amid much drama in 2019, struck deals in March to cut its debt by about $1.5 billion and extend the date of some maturities to preserve cash.

The company’s plans for a high-profile initial public offering imploded in October 2019 due to widespread criticism over its business model and Neumann’s management style. SoftBank later bailed out the startup.

The company, which has yet to turn a profit since ultimately going public via a SPAC merger in October 2021 at a valuation of $9 billion, has struggled to cope with the troubles in the tech sector, where mass layoffs have become rampant.

It has also seen an exodus of top executives, including the resignation of CEO Sandeep Mathrani and CFO Andre Fernandez this year, compounding its troubles.

Mathrani was hired in 2020 and tasked with the company's turnaround amid rising investor concerns over corporate governance standards.

WeWork on Tuesday said it was still continuing its search for a permanent CEO and that it had added four board members after three members stepped down.