FILE: A sign is posted on the exterior of a WeWork office on October 07, 2019 in San Francisco, California.
Justin Sullivan/Getty Images
The saga of WeWork, the co-working space company that has become synonymous with the highs and lows of 2010s startup culture, may be creeping toward its final chapter.
In a Tuesday press release, the 13-year-old company wrote that “substantial doubt exists” about its ability to stay in business. Once valued by investors at $47 billion, WeWork flamed out in a 2019 attempt to go public and, though still a major commercial real estate holder, has never turned a profit.
Shares of the company’s stock dropped about two-fifths in value after the announcement and were trading on Wednesday at 13 cents a share — a market cap of around $270 million.
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“As a result of the Company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the Company’s ability to continue as a going concern,” David Tolley, the firm’s interim CEO, wrote in the release. “Going concern” is an accounting term that means a business is financially stable and expecting to operate for the indefinite future.
A WeWork collapse would be another blow for San Francisco’s commercial real estate market. The company’s website lists 21 office spaces in the Bay Area, including three floors in Salesforce Tower and co-working locations in several other downtown buildings. WeWork had over $13 billion in long-term lease obligations at the end of June, the firm said in a filing with the Securities and Exchange Commission on Tuesday.
In the press release, the company blamed “excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility” for a “slight” decline in memberships. Indeed, metropolitan areas across the country have seen lessened office usage since the pandemic began, and a record amount of office space in San Francisco is currently sitting vacant, according to real estate giant CBRE.
As for the competition, WeWork might just be getting beaten at its own co-working business. Industrious Partners, a competitor, told SFGATE that memberships at their San Francisco locations are almost fully booked. The firm plans to open a huge new co-working space atop IKEA’s forthcoming 945 Market St. store.
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WeWork, founded in 2010, became the standard-bearing example of corporate hubris and shoddy investment scrutiny when its 2019 IPO attempt resulted in a slashed valuation, an ousted co-founder and a torrent of stories about mismanagement. In 2021, the company went public through a SPAC.
SFGATE trending news reporter Sam Mauhay-Moore contributed reporting.
Hear of anything happening at WeWork? Contact tech reporter Stephen Council securely at stephen.council@sfgate.com or on Signal at 628-204-5452.