Shares of coworking office space company WeWork Inc WE have been incredibly volatile over the last week, following an update from the company that rattled the stock.
After shares fell sharply, retail traders got behind the stock and could be trying to push shares back over $1.
What Happened: It’s not everyday that investors see a company once valued at $47 billion hit a market capitalization closer to $250 million. It’s also rare to see a company that was once valued at $47 billion to have shares pop 130% during a trading day.
A filing from the company earlier in the week warned investors that the company had concerns about its liquidity. WeWork ended the second quarter with $680 million in liquidity, which included $205 million in cash.
“The company’s ability to continue as a going concern is contingent upon successful execution of management’s plan to improve liquidity and profitability over the next 12 months,” the filing read.
In 2010, Adam Neumann and Miguel McKelvey founded the company by buying up office space and renting it out to customers. The company has faced struggles in recent years due to a push to remote work during the COVID-19 pandemic.
WeWork also saw the exit of Neumann as the company’s CEO and allegations over a frat like culture and discrimination based on sex and race.
At its peak, WeWork was valued at $47 billion. The company was set for a highly anticipated IPO but started to see its value drop over concerns at the company. A SPAC deal announced in 2021 valued the coworking company at $9 billion, a far cry from the $47 billion.
Related Link: Infamous WeWork Co-Founder Launches New Venture
Reddit Takes Hold: A spark in WeWork shares could likely be attributed to a thread on Reddit posted on Wednesday that inspired an investment case for the stock.
As Benzinga previously reported, a post on X, also compared WeWork to GameStop and may have inspired investors to consider the stock before the post was taken down. The post showed the stock chart of WeWork, which was down 98% from its IPO.
Reddit user u/lostredditacc posted “WeWork $1.00 price target ETA 7-8 weeks” as a due-diligence post on the popular social platform.
To kick off the post, the user wrote, “WeWork (2021-Hulu), WeCrashed (2022-Apple), WeSoBack (2023-Netflix?).”
The post suggests a role that streaming companies played in WeWork's downfall and potentially bringing the company into the meme stock realm with the rally cry.
WeWork was the subject of a documentary on Hulu. The documentary was titled “WeWork or the Making and Breaking of a $47 Billion Unicorn.” The film premiered at the South by Southwest festival in 2021 and went on to win an Emmy Award. It focused heavily on Neumann.
In 2022, Apple Inc AAPL released “WeCrashed” as a series on its AppleTV+ streaming platform. The series consisted of eight episodes that were around one hour each. Jared Leto portrayed Neumann in the series.
“Inspired by actual events – and the love story at the center of it all. WeWork grew from a single coworking space into a global brand worth $47 billion in under a decade. Then, in less than a year, its valuation dropped $40 billion. What happened?” a description for “WeCrashed” reads.
The Reddit post shares financial details like annual revenue and operating costs and goes into detail regarding an investment in the company by Softbank SFTBY.
“The saga continues…Or does it,” the post reads.
The post says that WeWork needs to hit $1 in the next eight weeks to stay on the NYSE and could see institutional investors coming in to help the company’s financial situation.
Reddit users upvoted the post, which saw hundreds of comments of investors who said they were buying shares of WeWork.
What’s Next: With shares of WeWork trading under $1, the company will need to see shares pass this level to meet listing requirements or need to complete a reverse stock split to hit the pricing threshold.
One of the big questions that could be answered soon will be if a short squeeze-style move could happen in WeWork shares.
Recall that retail traders were inspired by a callout on the r/WallStreetBest subreddit of an investment opportunity in GameStop Corp GME. Part of the inspiration for investments in GameStop came from seeing that hedge funds were heavily shorting GameStop and betting on the failure of the video game company, which led to a massive short squeeze.
Less than 3% of WeWork shares were short as of the latest data, but that could change when the next report is released and takes into account anyone that went short after the company shared concerns about its future.
Early 2021 saw the birth of the ‘"meme stock" phenomenon on r/WallStreetBets. The community noticed that GameStop was heavily shorted by institutional hedge funds, so retail traders piled into the stock, triggering a massive short squeeze.
An epic battle similar to David vesus Goliath emerged and became one of the biggest stories of Wall Street in decades.
Like the story of WeWork, the story of GameStop has been told through several documentary-style movies and television series.
The story was also turned into a book by Ben Mezrich, which will hit the big screen later this year with the theatrical release of “Dumb Money” in September 2023.
WE Price Action: Shares of WeWork soared on Thursday, trading in a range of 15 cents to 32 cents. On Friday, WeWork shares traded between 19 cents and 28 cents. Thursday’s intraday high was the highest shares had traded since May 17, 2023.
WeWork shares closed at 20 cents Friday, up 11% on the day. Shares of the company have traded between $0.12 and $5.85 over the last 52-weeks and are down 96% in the last year.
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