It’s been a good two years since we last wrote about WeWork, a once co-working unicorn startup that was valued at a massive $40 billion by SoftBank and has today become an emblem of the Silicon Valley tech bubble.
Back in November 2021, WeWork, which was already going through a rough patch, reported a staggering $1 billion increase in losses in its first quarterly report as a public company. Almost two years later, the situation is not getting better for the embattled company. The company recently revealed that things are getting pretty shaky on its end.
In a filing with the Securities and Exchange Commission (SEC) on Tuesday, WeWork said that there’s doubt about the company’s ability to keep operating.
“Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern,” WeWork said in the filing.
The company also added:
“If we are not successful in improving our liquidity position and the profitability of our operations, we may need to consider all strategic alternatives, including restructuring or refinancing our debt, seeking additional debt or equity capital, reducing or delaying our business activities and strategic initiatives, or selling assets, other strategic transactions and/or other measures, including obtaining relief under the U.S. Bankruptcy Code.”
And as if that weren’t enough, WeWork’s stock has been in a slump, staying under the $1 mark since around mid-March. On Tuesday, things took a real nosedive, plummeting a whopping 26% to a mere 15 cents during after-hours trading, according to a report by CNBC. This unfortunate turn of events has led to the company’s market capitalization dropping below the $500 million mark.
To make matters worse, WeWork’s membership numbers aren’t looking as robust as it had hoped, and the company is now pointing fingers at the tough economic times for part of the blame.
WeWork’s demise even managed to make its way onto AppleTV screens. Just last year, Apple TV+ premiered “WeCrashed,” a miniseries that delves into the rollercoaster journey of the company from its ascent to its eventual downfall.
WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey. It provides members around the world with space, community, and services through both physical and virtual offerings. Its mission is to create a world where people work to make a life, not just a living. As of Q2 2019, WeWork had 528 locations in over 111 cities and 29 countries. WeWork reported a third-quarter loss of $1.3 billion from a revenue of $934 million in 2019. The office-sharing startup currently has about 650,000 subscribers worldwide and hopes to hit 1 million by early 2021.
Since its inception thirteen years ago, the New York-based company had been plagued with setbacks and failures. As we noted back in October 2019, WeWork laid off a quarter of its 12,500 employees, fired its CEO Adam Neumann, and canceled its planned IPO.
Before going public, WeWork raised over $20.6 billion in funding over 17 rounds. Its latest funding was raised on Aug 14, 2020, from a Debt Financing round. The startup is funded by 18 investors. SoftBank and Goldman Sachs are the most recent investors.
In January 2020, investors saw the writing on the wall and ran for cover after the botched IPO. Here is how Reuters reported the story back then: “More than a dozen Silicon Valley-based lawyers, entrepreneurs, and venture-capital investors told Reuters that since the embattled WeWork’s canceled public offering and other ill-fated IPOs, investors have been securing protections of their original investments in “unicorns” – private companies valued at $1 billion or more.”
In October 2018, after the failed IP attempt, SoftBank took control of the struggling real estate startup WeWork slashing its valuation from $47 billion between $7.5 billion to $8 billion. In November 2019, WeWork reported a net loss of $1.25 billion, surpassing its sales. The third-quarter loss more than double its loss from the same period the previous year.