A sign marks a WeWork location in Boston, Massachusetts, U.S., August 14, 2023. Portal/Brian Snyder ACQUIRES LICENSE RIGHTS
Nov 1 (Portal) – Shares of WeWork (WE.N) plunged nearly 50% to a record low on Wednesday after media reported the flexible workspace provider planned to file for bankruptcy as early as next week.
The New York-based company, which has been struggling with high debt loads and heavy losses for several years, was once privately valued at $47 billion and now has a market capitalization of just under $121 million.
The potential bankruptcy filing would follow a series of setbacks for the SoftBank-backed company as its IPO plans collapsed in 2019 amid skepticism over its business model of taking long-term leases and renting them out short-term.
WeWork, which eventually went public in 2021 at a much lower valuation than initially expected, remains a black mark for SoftBank, which has poured billions into efforts to prop up the startup that has never turned a profit.
As the Wall Street Journal first reported on Tuesday, WeWork is considering filing a Chapter 11 petition in New Jersey.
The company decided to withhold the Nov. 1 interest payment on senior notes due 2025, even though it had the cash on hand to make the payment, it said Tuesday. WeWork had warned that the company could go bankrupt in August.
“Regardless of whether WeWork can reach a near-term agreement with bondholders to avert near-term bankruptcy, the company likely has many long-term office leases that need to be restructured or written off,” said Jason Benowitz, senior portfolio manager at CI Roosevelt Private Wealth in New York.
“WeWork remains a significant tenant in some major urban office markets and its failure or restructuring could further weigh on industry fundamentals.”
The stock last traded at a historic low of $1.18, the latest in a string of record lows, after losing about 96% of its value this year.
Reporting by Medha Singh in Bengaluru; Edited by Shinjini Ganguli and Shounak Dasgupta
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