Office Space Empire In Peril: WeWork's Crisis Raises Alarming Questions

WeWork Inc WE, once valued at $40 billion, is now in trouble and warned investors Tuesday that it could be going out of business soon, according to a recent SEC financial filing from the company. WeWork, which allows customers to rent office space, has struggled since the COVID-19 pandemic pushed hundreds of thousands of workers to work remotely and crushed the demand for in-person office spaces. 

WeWork has attracted a lot of attention throughout its existence, in part because of its eccentric founder, Adam Neumann. Neumann created a chill, party-like atmosphere in his workplace, including a keg. Eventually, the company implemented a ‘four-beers-a-day’ limit for its employees. But, the founder had success early in getting employees to buy into WeWork’s mission. 

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Through rosy projections, WeWork was able to raise a lot of money in Silicon Valley and was valued at more than $40 billion ahead of its planned IPO in 2019. But, Wall Street became concerned with a number of problems at WeWork, including its unrealistic growth and revenue projections as well as an immature company culture, and its valuation dropped by tens of billions of dollars in a few months.

WeWork didn’t end up going public in 2019, and waited until 2021 before eventually going public via a SPAC. After Tuesday’s filing showed the company’s growing concern, the stock dropped more than 30% in Wednesday’s session. WeWork’s market cap was less than $300 million after its latest drop. 

WeWork had many issues, evident in its 2019 failed IPO, before the COVID-19 pandemic. But the shift toward remote work has exasperated the company’s shortcomings, and will likely be the final dagger in the one-time unicorn.

According to recent reports, commercial real estate deals for office space are drying up.

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