It’s been nearly a year since we last checked in on WeWork when we wrote a blistering critique of its founder, Adam Neumann, who has demonstrated an uncanny ability to fail upwards and amass obscene wealth in the process. The WeWork narrative is one of shareholder pain and suffering coupled with broken dreams and empty promises. Neumann is doing just fine though: he walked away with a whopping $1.7 billion (yep, that’s a “b”) while the company currently teeters on collapse with a market value of approximately $700 million and trading under $1 per share. So the stock is in the crapper but perhaps operationally the company is doing better? Nope, WeWork recorded a loss of $527 million in the fourth quarter of 2022 (better, however, than a year earlier when the company lost $803 million). Revenue for the first quarter of 2023 is expected to come in well under analyst estimates and the cash burn for the year is pegged at $210 million.
The company is undertaking a financial restructuring that will involve its largest shareholder converting debt to equity and extending the maturity of its existing loans at higher interest rates no doubt. CEO Sandeep Mathrani—putting on his best game face—claims the company is “methodically executing his plan to achieve profitability.” Call me Groucho Marx and count me out of this club of financial chicanery. That said, you almost can’t blame CEO Sandeep as he was handed something unsalvageable and asked to conjure up a nearly impossible turnaround. WeWork was doomed from the start with an easily duplicable business model exacerbated by bad execution and insider grift. The next update on WeWork will likely find the company in the bankruptcy bin. See you then.
Stribling, Dees. “WeWork, Now Trading below $1, on Verge of Financial Restructuring.” Bisnow, 16 Mar. 2023, www.bisnow.com/national/news/coworking/fresh-capital-infusion-for-wework-from-softbank-reportedly-in-the-offing-118131.
Be First to Comment