WeWork, the once high-flying co-working space provider, is reportedly on the brink of filing for Chapter 11 bankruptcy in New Jersey, according to sources cited by The Wall Street Journal. This news comes after months of speculation about the company’s financial woes and its ability to stay afloat.
In its second-quarter earnings report released in August, WeWork had already warned investors about “substantial doubt” regarding its future as a going concern. The company has been facing challenges for years as the demand for its shared office spaces has declined. The COVID-19 pandemic only made matters worse, as businesses shifted to remote work and reduced their office space needs.
Earlier this month, WeWork missed interest payments to its bondholders, further highlighting its financial struggles. As a result, the company was given a 30-day ultimatum to come up with the necessary payments. To address its dire situation, WeWork announced on October 30 that it had initiated discussions with stakeholders, including SoftBank and Goldman Sachs, to improve its balance sheet and rationalize its real estate portfolio.
The numbers paint a bleak picture for the company. WeWork reported a net loss of $397 million for the second quarter on revenue of $877 million. Such staggering losses have taken a toll on the company’s stock price, which has plummeted by over 47% after-hours trading and is currently valued at just $1.21. This sharp decline in stock price has also caused WeWork’s market capitalization to plummet to a meager $121 million, a far cry from its valuation of $47 billion in January 2019.
The imminent Chapter 11 filing in New Jersey showcases the depth of WeWork’s financial troubles. The company, once touted as a visionary disruptor in the office space industry, now faces the daunting task of restructuring and finding a way to survive. As WeWork’s struggles continue, industry experts and competitors alike are closely watching to see if the company can salvage what remains of its once lofty ambitions.