WeWork, which assembled a billion-dollar global empire of coworking spaces during the ‘teens, said in an 8 August statement that “substantial doubt exists about the company’s ability to continue as a going concern.”

WeWork has long been trying and failing to deal with overwhelming debts and a dearth of income.

Also last week, three board members, including the chair, resigned over “a material disagreement regarding board governance and the company’s strategic and tactical direction,” the company announced.

Amid the drama, WeWork’s share price sank 26 percent, at one point reaching 15 cents.

After the company completed a financial restructuring this year intended to buy time for WeWork to revive, Sandeep Mathrani, the CEO who was brought in to turn things around, abruptly resigned.

WeWork was built on a vision that companies large and small would cut back on high-cost office space and workers would drop in at WeWork locations when they needed workspace. Charismatic CEO Adam Neumann sold the vision of a “physical social network” that would draw a new kind of worker, one that wanted to socialize and work in a relaxed atmosphere of like-minded free spirits.

Neumann rented and renovated hundreds of spaces, turning them into dazzling environments but often disregarding cost and betting on the income. 

By 2019, WeWork was the largest office-space tenant in Manhattan and was valued at $47 billion, despite reporting a $2-billion loss the year before.

However, the company’s fees to use the spaces were so high that not enough workers signed up to pay back those remodeling costs or even pay WeWork’s rent consistently.

“This has never been a business model that worked,” Vicki Bryan, CEO of research firm Bond Angle, told The New York Times.

WeWork nearly imploded in 2019 after a failed public stock offering, seeing its valuation crash to $7 billion. However, it was rescued by Japanese venture capital giant Softbank. 

After the COVID War sent people home to work, WeWork saw a path to profitability and issued stock through a special-purpose acquisition company.

While that helped, it was not enough to put the company in the black. During the first half of this year, it ate $530 million in operating costs, about the same amount as the same period in 2022.

From 2018, WeWork has vaporized $15 billion and handed Softbank $10 billion worth of red ink.

To keep going, the company would have to cut its lease costs and other expenses, grow revenue, and find “additional capital via issuance of debt or equity securities or asset sales,” interim CEO David Tolley said in the statement. The prospects for those outcomes are not bright.

Meanwhile, the company will seek to reduce “member churn and increase occupancy.”

TRENDPOST: If WeWork vanishes, it would throw another mass of empty office space onto a market already flooded. About 20 percent of U.S. office space nationally was vacant in this year’s first quarter, real estate services firm JLL said.

The value of office space in the U.S. will decline by 45 percent between 2019 and 2029, recent research from Columbia University calculated.