WeWork, the co-working space in which SoftBank has invested heavily, warns of possible bankruptcy, admits there are ``serious doubts about its ability to continue''


Phillip Pessar

WeWork , a major co-working space company in which the SoftBank Group has invested heavily, stated in a document submitted to the U.S. Securities and Exchange Commission (SEC) on August 8, 2023 that it has the ability to continue operating as a company. I have reported that I have doubts.

WeWork warns of remaining 'going concern' and says bankruptcy possible

Once worth $47 billion, WeWork shares near zero after bankruptcy warning | Reuters

Founded in 2010, WeWork is a company that provides physical coworking spaces around the world, and has achieved significant growth with large investments from Softbank and others. In 2019, the company's corporate value reached $47 billion (approximately 5.3 trillion yen at the exchange rate at the time), and it was scheduled to make an initial public offering (IPO) with much fanfare in the same year.

However, documents submitted to the SEC regarding the IPO revealed poor business operations, and founder Adam Neumann 's behavior was called into question, and Neumann eventually stepped down as CEO in 2019. The IPO was also abandoned.

WeWork, whose CEO resigned after failing to raise funds and causing a huge uproar, officially withdraws its listing application - GIGAZINE

Since then, WeWork's business has continued to slump due to the increase in remote work due to the new coronavirus infection (COVID-19) pandemic and the global economic downturn. Although the company achieved its long-awaited listing in 2021, its valuation remained at $9 billion (approximately 1 trillion yen at the exchange rate at the time), which was significantly lower than before.

The stock price at the time of listing was $9.82 per share (approximately 1,100 yen at the exchange rate at the time), but it was reported in 2023 that the company was in talks with investors regarding the arrangement of over $3 billion (approximately 430 billion yen) in debt. Since March 2017, one share has been below 1 dollar (about 144 yen), and the stock price at the time of article creation is a whopping 0.13 dollars (about 19 yen).

SoftBank Group has invested a total of several trillion yen in WeWork, and is the largest shareholder at the time of article creation. Masayoshi Son, the company's representative director, was asked about investing in WeWork at a shareholders' meeting in June, and said, ``It's my responsibility'' and ``a stain on my life.''

Masayoshi Son admits WeWork investment failure is a 'stain on my life' | Nikkei Crosstech (xTECH)

Meanwhile, in a filing with the SEC on August 8, WeWork stated that ``losses from operating activities and negative cash flows cast doubt on our ability to continue as a going concern,'' and ``our liquidity position and business If we are not successful in improving profitability, we may restructure or refinance our debt, raise additional debt or equity capital, reduce or postpone business activities and strategic initiatives, sell assets or other strategic transactions, or 'We may need to consider a full range of strategic options, including other measures, including relief under the Bankruptcy Code,' he said, warning that the company could go bankrupt.

WeWork has been working to improve its management in recent years, and its net loss for the second quarter of fiscal 2023 decreased from $557 million (approximately 80 billion yen) in the same period last year to $349 million (approximately 50 billion yen). However, it still lost $646 million (approximately 93 billion yen) in cash in the first half of 2023 alone.

In addition, the reduction in investment from the SoftBank Group and the retirement of members have become issues, with CEO Sandeep Masrani resigning in May, and three board members being suspended in August. reportedly resigned due to 'significant disagreements regarding board governance and the company's strategic and tactical direction.'

in Note,   , Posted by log1h_ik