(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.
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.
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.
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.
WeWork said it may need to consider strategic options, including raising more money or obtaining relief under the U.S. Bankruptcy Code.
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.
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.
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.
WeWork eventually went public in 2021 through a SPAC (special purpose acquisition company) merger amid persistent doubts over its business model.
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.
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.
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.
The company said it was planning to shore up liquidity by reducing rent and tenancy costs, controlling expenses and reducing member churn.
