WeWork
stock tumbled in premarket trading Wednesday as the company raised “substantial doubt” over its ability to stay in business.
The short-term office-rental company, which was once valued at $47 billion after a funding round in 2019, issued the warning with its second-quarter earnings results after the market closed. The company cited losses, its projected cash needs, increased member churn and liquidity levels.
The company, which went public by merging with a special-purpose acquisition company (SPAC) in October 2021 more than two years after withdrawing IPO plans, had a market capitalization of $447 million as of Tuesday’s close, before its 19% drop in the premarket.
WeWork (ticker: WE) said its ability to continue as a going concern depended on the success of its turnaround plan to improve profitability and liquidity in the next twelve months. The plan includes cutting rent and tenancy costs and increasing revenue by limiting the loss of members and boosting new sales.
The company added that it needs to control expenses and seek additional capital either by a debt issue, a stock sale, or by selling assets.
The stock has plunged 85% so far in 2023, as of Tuesday’s close.
Write to Callum Keown at [email protected]
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