If you have ever operated a startup, or were looking for a place to sit down and get some work done, you may have come across WeWork. The US-based SoftBank backed company started a huge trend of offering shared office spaces for reasonable prices and cemented a presence in more than a 100 cities around the world. At their peak, the company was valued at a massive $47 billion, but then, news started circulating about their shady ownership, and soon enough, the entire world knew about the company’s financial ordeals, something that was even more highlighted in the Apple TV+ series WeCrashed.
The company has done it’s fair share of consideration and now, it looks like they have decided to pull the plug and submit a Chapter 11 petition in New Jersey. They have announced that the company has decided to withhold interest payments in order to keep the company running in the meantime.
After this news broke out, WeWork saw stock prices drop by 32% in extended trading, and then once again by 35% in premarket trading. Overall, the stocks have been down 96% overall this year, which is definitely not something to be proud of. As far as their finances are concerned, the company has a net long-term debt of $2.9 billion in June 2023, and more than $13 billion in long-term leases. Another factor that truly hampered the operations of WeWork, was the pandemic. With everyone forced to work from home, the demand for leased and shared office spaces declined, leading to a loss of loyal and long term customers.
The fall of WeWork seems to be the tip of the ice berg and we have a feeling that this is going to become a snowball effect and we may even see other shared office providers pull the plug on operations as the business model seems to be increasingly unsustainable.
