NEW YORK (AP) — Trading in WeWork stock was suspended Monday as rumors circulate that the office-sharing company, once valued at $47 billion, will seek bankruptcy protection.
Last week, The Wall Street Journal and other media outlets reported that WeWork planned to file for Chapter 11 bankruptcy protection as soon as this week, citing unnamed sources familiar with the matter.
A WeWork spokesperson said last week that the company does not comment on speculation and did not immediately respond to messages after trading in the company’s stock was suspended on Monday.
WeWork shares, which cost more than $400 two years ago, could be purchased on Monday for less than $1.
The specter of bankruptcy has been hanging over WeWork for some time. In August, the New York company raised the alarm about its ability to stay in business. But cracks had begun to emerge several years ago.
WeWork is paying the price for aggressive expansion in its early years. The company went public in October 2021 after its first attempt to do so two years earlier failed spectacularly. The debacle led to the ouster of founder and CEO Adam Neumann, whose erratic behavior and exorbitant spending spooked early investors.
Japan’s SoftBank stepped in to keep WeWork afloat, acquiring majority control of the company.
Despite efforts to turn around the company since Neumann’s departure, including significant cuts to operating costs and increased revenue, WeWork has struggled in a commercial real estate market that has been shaken by rising costs of borrowing money, as well as a changing dynamic for millions. of office workers now check into their offices remotely.
In September, when WeWork announced plans to renegotiate nearly all of its leases, CEO David Tolley noted that the company’s lease liabilities accounted for more than two-thirds of its operating expenses for the second quarter of this year, and remained “too high” and “dramatically out of step with current market conditions.”
Last month, WeWork skipped hefty interest payments, initiating a 30-day grace period before a default event. And last week, WeWork revealed a forbearance agreement with bondholders that extended negotiations a week before triggering a default.
