WeWork Falls Under
On Monday night, investors were shocked to hear when American-based office-sharing company WeWork filed for bankruptcy as it seeks to cover financial obligations. Founded in New York City nearly 13 years ago, WeWork sought to create environments where different people and companies could work together in a combined space. By undertaking leases on large properties and buildings, WeWork provided flexible workspaces for businesses seeking either traditional or hybrid offices. Although the company wasn’t profitable until last year, the firm was able to reach a valuation of $47 billion in 2019 by SoftBank.
Unfortunately, WeWork over the years suffered from large financial obligations ranging anywhere from $10 billion to $50 billion. Although revenues saw a boom as the company disrupted the property ownership space, these sales weren’t enough to carry the firm out of crippling long-term lease agreements. From the pandemic, WeWork’s demand plummeted as both small and large businesses transitioned to remote and hybrid work, making cavities in office occupancy levels. In the past year alone, the stock for the struggling company had fallen 99.22%, leaving WeWork no choice but to restructure and file for Chapter 11 bankruptcy. In the meantime, the company plans to reorganize itself as it closes non-operational leases to cover priority debt obligations.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.