The office space provider WeWork, which once became the prime example of wildly overvalued US start-ups, is in trouble again. WeWork admitted on Tuesday that it had "significant doubts" about the company's continued existence in view of the losses and the expected cash requirements. WeWork announced that they now want to negotiate cheaper rents, reduce costs and raise fresh capital over the next twelve months.
The idea behind WeWork is to rent office space with a shared infrastructure to start-ups and entrepreneurs in so-called co-working spaces. Thanks in part to clever marketing by the founders, financiers invested in WeWork at a total valuation of up to 47 billion dollars.
With this reputation as one of the most valuable start-ups, WeWork wanted to go public in 2019 - but instead of a triumph there was a flop. The deeper insight into the business in the prospectus prompted large investors to avoid the loss-making company.
Office space cannot be filled
The debacle at the time was particularly expensive for the Japanese group Softbank owned by billionaire Masayoshi Son. Softbank and its vision investment fund, which was backed by Saudi Arabian money, had secured a 29 percent stake in WeWork for nine billion dollars. When the IPO fell through in 2019, Softbank raised another $9.5 billion to increase its stake to 80 percent and squeeze out controversial co-founder and CEO Adam Neumann.
But even under the direction of Softbank, WeWork was unsuccessful. In the corona pandemic, offices around the world emptied because people were working from home. Even after the pandemic has subsided, 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. Only a few months ago, WeWork was able to reduce the debt burden somewhat through talks with financiers.
In 2021, WeWork made it to the stock exchange through a detour. WeWork went public after merging with a blank check company. At the time, a share was trading for around $13. In after-hours trading on Tuesday, the price fell again by more than a fifth to around 16 US cents.