'Billion Dollar Loser': Is WeWork Going Bankrupt? Its Recent SEC Filing Indicates Possible Doom
Flexible coworking space provider WeWork has in its recent SEC filings, revealed how the firm may file for bankruptcy in the near future. The firm noted how negative cash flows from operating activities are hindering its ability to progress, planting doubt on its advancement and development further ahead.
Is WeWork going bankrupt?
In its SEC filing, WeWork stated how the firm is struggling to stay afloat in the current economic scenario. The company noted how negative cash flows from operating activities have blocked WeWork's progress and raised "substantial doubt" about the firm's future proceedings.
"Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern," WeWork told the SEC via its filings.
The company further announced that its primary duty, for now, will be to structure the firm's finances and keep WeWork functional and running. However, the filings revealed that if WeWork failed to gather momentum, the firm may undergo extreme measures to enhance its liquidity position, including opting for "restructuring and refinancing" to discipline the core operations of the firm. The company announced a net loss of $397 million for the second quarter. The revenue for the said period stood at $877 million.
WeWork's spiraling journey
Launched in 2011, WeWork was once valued at $40 billion by Softbank, making it one of the most lucrative businesses to ever exist. The company had a vision to expand; however, the recent economic setting, combined with the isolation brought by the COVID pandemic, impacted the firm in a negative light. Its investors included the likes of J.P. Morgan Chase & Co., Goldman Sachs, Wellington Management, and Harvard Corporation among others. In its heyday, WeWork operated from 779 locations in 39 countries.
The company that thrived on the idea of renting spaces to offices globally was compelled to halt its operations, primarily due to the pandemic that led to the rise of remote work culture. The setting led the firm to encounter several financial crunches and setbacks, leading the firm to face heavy debts.
Additionally, WeWork stocks have also plunged following the news of WeWork's possible bankruptcy. The stocks had already fallen below $1 since March 2023. The news further progressed the impact, leading the stocks to tumble below 26%. According to CNBC, as of June 30, WeWork had $205 million in cash and equivalents and total liquidity of $680 million. It has $2.91 billion in long-term debt.
The company had earlier planned to debut an IPO, but it failed to do so. Softbank CEO and founder Masayoshi Son dubbed his decision to invest in WeWork as foolish, due to the company's continuous downward spirals and setbacks.
It was in 2021 that WeWork finally became public through a SPAC merger. But the firm's financial conditions remained concerning and questionable. The WeWork staff also continued to depart to seek other prospects. According to CNBC, the company has reported concerns related to limiting capital expenditures, increasing revenue, and seeking capital through debt or equity issuance.