New York –
WeWork has sounded the alarm on its ability to stay in business, prompting speculation around the future of the troubled workspace-sharing company.
Last week, WeWork warned there was “substantial doubt” about the New York-based company’s “ability to continue as a going concern” — which is accounting-speak for having the resources needed to operate and stay in business. WeWork pointed to increased member churn, financial losses and the company’s need for cash, among other factors, over the next year.
This isn’t the first time the future of WeWork has been uncertain. The company went public in October 2021 after a spectacular collapse during its first attempt to do so two years earlier — which led to the ouster of its CEO and co-founder, Adam Neumann. WeWork was valued at $47 billion at one point, before investors started to drop off due to Neumann’s erratic behavior and exorbitant spending.
WeWork has made notable efforts to turn the company around since Neumann’s departure, with executives pointing to improvements in annual revenue, significant cuts in operating costs and other growth opportunities as workplaces emerge from the COVID-19 pandemic. Still, experts say the risk of bankruptcy is on the table — bringing in questions around implications for the already-weakening world of office real estate.
Here’s what you need to know.
WHAT IS WEWORK?
WeWork is a provider of coworking spaces. The company leases buildings and divides them into office areas to sublet to its members, which include small businesses, startups and freelancers who want to avoid paying for permanent office space.
WeWork was founded by Neumann and Miguel McKelvey back in 2010. The startup promised to revolutionize workspaces and saw a meteoric rise in its early years, but over time, WeWork’s operating expenses soared and the company relied on repeated cash infusions from private investors.
Since Neumann’s 2019 ouster, the company has seen several leadership changes. Most recently, Sandeep Mathrani, who joined WeWork in 2020, stepped down in May — bringing David Tolley into the position of interim CEO.
“WeWork’s challenges are a legacy of its earlier and very aggressive expansion… And the costs (that the company bears from) that expansion continue,” said Sam Chandan, director of the Chao-Hon Chen Institute for Global Real Estate Finance at New York University’s Stern School of Business. “By many measures, company revenues and performance is