WeWork Raises Doubt About Its Survival

livemint.com:

startups worth $47 billion, said Tuesday excess supply of commercial real estate, greater competition for flexible space and uncertain economic conditions resulted in losses in the second quarter. The company has seen higher churn and lower demand than it anticipated, with memberships at its locations falling from a year ago, Interim Chief Executive Officer David Tolley said in its quarterly results.

WeWork’s management also warned that “as a result of our losses…which have been impacted by the recent increases in member churn…substantial doubt exists about the company’s ability to continue as a going concern." WeWork raised billions of dollars from firms like SoftBank, its largest financial backer, but its growth stalled after investors raised concerns over its charismatic co-founder Adam Neumann’s unorthodox management style and his related-party transactions with the company. He was ousted in 2019 and under new management WeWork went public in 2021 through a merger with a special-purpose acquisition company.

However, the company’s stock is down more than 95% since its public listing, with an estimated market capitalization of around $450 million as of Tuesday, and based on its share price SoftBank has lost billions of dollars on its investment in the company. WeWork said Tuesday that its ability to continue in existence as a business depends “upon successful execution of management’s intended plan over the next twelve months." Recession fears and tech-industry job cuts have weighed on demand for co-working desks, part of broader turmoil affecting the commercial real-estate market because of employees’ reluctance to return to the office.