WeWork’s shares plunge 37% on bankruptcy reports
By Hanna Ziady, CNN
London (CNN) — WeWork’s shares plunged 37% in pre-market trading Wednesday, following news reports that the beleaguered company plans to file for bankruptcy as early as next week as its losses mount.
The SoftBank-backed flexible workspace provider is considering filing for Chapter 11 bankruptcy protection in New Jersey, the Wall Street Journal and Reuters reported Tuesday, citing people familiar with the matter.
A WeWork spokesperson told CNN the company would not comment on “speculation.”
Earlier on Tuesday, WeWork (WE) said it had agreed with creditors to extend a 30-day grace period to make interest payments on some of its debt that was due to expire this week. The new “forbearance agreement” will terminate on November 6, according to a timeline provided by the company.
A bankruptcy filing would mark a spectacular reversal of fortunes for a company valued at $47 billion in 2019. It would also come as a major blow to SoftBank, which has sunk billions into the once-celebrated startup.
“WeWork looks as if it could be coming to a messy end,” said Russ Mould, investment director at UK stockbroker AJ Bell. “Its major backer SoftBank must have reached a point where it can no longer justify bailing the business out.”
WeWork’s shares have plunged 96% this year amid ongoing losses and a massive debt pile, which has become more costly to service as borrowing costs have risen on the back of interest rate hikes by central banks.
The company’s demise has been years in the making, after it struggled to recover from a botched IPO in 2019. At the time, listing paperwork revealed larger-than-expected losses and potential conflicts of interest related to the company’s founder and then-CEO Adam Neumann.
The company eventually went public two years later at a valuation of about $9 billion, but it has continued to burn through cash and struggled to retain members, who pay to rent desks at WeWork’s office spaces.
In August, the company said “substantial doubt exists” about its ability to stay in business, as it unveiled a turnaround plan to shore up its finances.
WeWork made a $694 million loss in the first half of this year, an improvement on the $1.1 billion loss it reported for the first six months of 2022.
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