WeWork shares sink after warning of bankruptcy risk By Reuters

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<span>© Reuters. The WeWork logo is displayed on a screen during the company’s IPO on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 21, 2021. REUTERS/Brendan McDermid/File photo</span><br />
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<p>(Reuters) -WeWork on Tuesday warned of a possible bankruptcy after reporting yet another quarterly loss, in a stunning reversal of fortune for the shared workspace provider that was valued at $47 billion in 2019.</p>
<p>The SoftBank-backed firm is worth just $446.8 million as of last closing share price. The stock plunged 16.5% to 20 cents before the bell on Wednesday after it said three board members would step down.</p>
<p>WeWork has been struggling to turn a quarterly profit as hybrid work culture and job cuts in the tech sector have hampered demand for its workspaces.</p>
<p>The departure of its CEO and CFO earlier this year has also complicated its turnaround efforts. The company said on Tuesday that the search for a new CEO is on.</p>
<p>WeWork said it may need to consider strategic options, including raising more money or obtaining relief under the U.S. Bankruptcy Code.</p>
<p>The company has been in a turmoil ever since it filed its IPO paperwork in 2019 as investors pointed out governance issues involving its then founder-CEO Adam Neumann.</p>
<p>They also raised concerns about burgeoning losses and questioned its business model that involved taking long-term leases and renting out spaces for a short term.</p>
<p>As a result, its valuation fell to as low as $10 billion in the back half of 2019 from $47 billion and it withdrew the IPO plans after ousting Neumann.</p>
<p>WeWork eventually went public in 2021 through a SPAC (special purpose acquisition company) merger amid persistent doubts over its business model.</p>
<p>As results suffered, WeWork reached a deal in March to cut debt by about $1.5 billion and extend the date of some maturities in a bid to preserve cash.</p>
<p>It shuttered offices and laid off workers, helping the company report a smaller net loss of $349 million in the second quarter compared to $577 million a year ago.</p>
<p>WeWork burnt $646 million in cash in the first six months of 2023 and as of June end is left with $205 million in hand.</p>
<p>The company said it was planning to shore up liquidity by reducing rent and tenancy costs, controlling expenses and reducing member churn.</p>
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