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Wow. The once high flying unicorn is warning that it may not survive. The company never lived up to the hype...and the Covid-19 pandemic changed the way white collar Americans do their jobs.
Much has been written and shown about the collapse of WeWork. There was a great book co-authored by my former CNN colleague Maureen Farrell as well as an Apple TV+ series with Jared Leto and Anne Hathaway as Adam and Rebekah Neumann…not to mention a Hulu documentary as well. Still, it is stunning to see just how much worse things have gotten for WeWork.
WeWork’s latest “earnings” report really demonstrates just how much of a financial disaster it has become.
Put aside the wackiness of the Neumanns and the fact that they somehow convinced/duped investors into thinking that the company could be worth as much as $47 billion at one point. What is really mindboggling is that WeWork, which had to shelve plans for a traditional IPO and then went public in late 2021 through a blank check SPAC merger, (talk about another once hot Wall Street trend turned financial disaster) is now worth only a little more than $100 million.
WeWork said in Tuesday’s second quarter results that not only is it continuing to bleed red ink (it reported a net loss of nearly $400 million) but that “substantial doubt exists about the Company’s ability to continue as a going concern” due to its high debt load and continued member churn.
The biggest problem that WeWork faces (which nobody saw coming back in the glory startups days before the pandemic) is that the future of the office is highly uncertain. Commercial real estate owners in numerous big cities are grappling with how to fill tons of vacant square footage now that many white collar workers have discovered that they can do their work remotely several days a week…if they even ever need to go into the office at all.
Sure, there are some hardliners like Elon Musk out there who demand that people return to the office instead of working from home. But many Americans who primarily do their job with a laptop and smartphone are calling Musk’s bluff. Plenty of other companies are still willing to let talented people work from wherever they want, at least part of the time.
That’s why WeWork is now a stock that trades for just about 14 CENTS a share. WeWork plunged 35% Wednesday on the going concern news. Yes, you can blame a lot of WeWork’s financial woes on the new age goofiness of Adam Neumann. But the biggest problem for WeWork is that we don’t work the same way as we did before Covid-19. And we may never will. Companies don’t need to rent pricey co-working spaces when people are content to stay in their home office and Zoom the day away.