One of the pioneers of flexible office working could be facing serious issues after WeWork confirmed it has serious concerns about its future
Following years of financial worries and concerns about the company’s founder, Adam Neumann, WeWork was finally starting to see the light at the end of the tunnel when Neumann’s replacement Sandeep Mathrani stepped in as CEO in 2020.
Despite regarding recent years as a period of “notable transformation,” Mathrani declared that he would be stepping down earlier this year, and now, the company that was once valued at $47 billion is now struggling to turn over a profit amid a worsening state of affairs.
WeWork could be on the brink of collapse… again
The transformation of WeWork could not have come at a worse time. By then, the world was descending into the darkness of the covid pandemic and workers were being sent home with packed bags. In the years that followed, many have continued to work remotely while numerous companies have adopted a hybrid working routine that has allowed them to cut back on office space, including coworking spaces.
In its most recent quarterly report, WeWork declared a net loss of $397 million on a revenue of $844 million, despite a year-on-year increase in revenue from $815 million. WeWork stock is currently valued at $0.21, down from a 2021 high of more than $13.
The company said in a press release: “…as a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern.”
As of June 30, WeWork’s occupancy rate stood at 72% with revenue per member up 4% compared with the same period last year.
Looking ahead, WeWork said that its success lies in negotiating more favorable lease terms to reduce rent and tenancy costs, reducing member churn, obtaining better control over its expenses, and sourcing additional capital.
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