Office landlord on the verge of bankruptcy
WeWork shares suspended from trading
November 6th, 2023, 8:39 p.m
Listen to article
This audio version was artificially generated. More info | Send feedback
Even after the pandemic subsides, office landlord WeWork is having a hard time filling its office space. The crisis is getting worse. The company is reportedly on the verge of bankruptcy. The New York Stock Exchange is pulling the emergency brake.
The New York Stock Exchange (NYSE) has suspended the shares of office landlord WeWork from trading. The reason given was that news could be expected from the company. It was already said last week that WeWork planned to file for bankruptcy in New Jersey this week in order to get its debts under control.
The startup, which was once valued at $47 billion and backed by Japanese tech investor Softbank, is now only worth $44 million on the stock market. WeWork has never been in the black. Plans to reduce costs so much that the company would at least stop burning money failed due to the weakness of the office real estate market.
Last Tuesday, a 30-day period within which WeWork would have had to service promissory notes expired. However, the company let the deadline pass. The rating agency Fitch classifies this as a “limited credit loss” and has downgraded WeWork’s liabilities worth $1.4 billion accordingly. However, the business model is fundamentally viable if WeWork manages to achieve higher utilization and separates itself from weak locations.
A detour to the stock market
A few years ago, WeWork became a cautionary tale for grossly overvalued US startups and has recently been in trouble again. As early as August, the company admitted “significant doubts” about its continued existence in view of its losses and expected cash requirements.
During the corona pandemic, offices around the world emptied because people worked at home. Even after the pandemic subsides, WeWork is struggling to fill its office space. At the same time, rental costs for buildings have to be paid and debts have to be serviced. In 2021, WeWork made it onto the stock exchange in a detour – by merging with an already listed blank check company. Last Tuesday, WeWork was worth around $120 million in after-hours trading before the collapse.