WeWork's Shares Sinks Amidst Looming Bankruptcy Fears

Akif Wani | November 1, 2023 | 07:50 PM IST | Breaking News |

WeWork’s Shares Sinks Amidst Looming Bankruptcy Fears

WeWork (WE.N), once a shining star in the flexible workspace industry, has seen its shares sink by nearly 50% to an all-time low. This dramatic decline follows media reports indicating that the New York-based company is considering filing for bankruptcy as early as next week. The once high-flying unicorn, which was privately valued at a staggering $47 billion, now finds itself with a market capitalization of just around $121 million.

SoftBank’s Ongoing Woes with WeWork

WeWork’s troubles have been ongoing for several years, with mounting debt and substantial losses. The company’s woes began when its ambitious IPO plans fell apart in 2019, leaving investors skeptical about its business model of securing long-term leases and subleasing them for shorter durations. SoftBank, a major backer of WeWork, has suffered considerable financial setbacks, having poured billions into rescuing the startup, which has yet to turn a profit.

The Looming Bankruptcy of WeWork and Its Potential Impact on the Office Market

News of WeWork contemplating a Chapter 11 bankruptcy petition in New Jersey has sent shockwaves through the business world. On Tuesday, the company even announced its decision to withhold interest payments on senior notes due in 2025, despite having the funds to make the payment. WeWork had previously issued a bankruptcy warning back in August.

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Jason Benowitz, a senior portfolio manager at CI Roosevelt Private Wealth in New York, pointed out, “Whether or not WeWork can reach a short-term accommodation with bondholders to stave off a near-term bankruptcy, it likely holds many long-term office leases that will need to be restructured or written off. WeWork remains a significant tenant in some major urban office markets, and its failure or restructuring may further weigh on industry fundamentals.”

WeWork’s stock has reached a historic low, trading at just $1.18, marking a staggering 96% decline in its value over the course of this year. The fate of the once high-flying unicorn now hangs in the balance, as it faces the potential consequences of its impending bankruptcy.