WeWork, the American commercial real estate company, has been in the news for all the wrong reasons. The company's initial public offering (IPO) was highly anticipated, but it failed to materialize due to a series of controversies. The company's former CEO, Adam Neumann, was accused of mismanagement and unethical behavior, which led to a loss of investor confidence. The company's shares have been plummeting ever since.
According to a report by Business Insider, WeWork's IPO plan has been spiraling downhill since August 2019. The company's mounting losses, corporate governance issues, and the behavior of its eccentric former CEO were increasingly criticized. Eventually, WeWork had to shelve its plan to go public indefinitely.
WeWork's IPO failure was a significant blow to the company. The company was valued at $47 billion at its peak, but it has struggled to recover after the failed IPO attempt. In 2021, WeWork finally went public after completing a merger with a blank-check firm, BowX Acquisition Corp. However, the company has continued to burn through cash and struggled to retain members who pay to rent desks at WeWork's office spaces.
WeWork's shares have been trading around 20 cents apiece since May 2023. Analysts said WeWork's past had spooked potential tenants and left it with massive debts. The company's early decision to act like a big tech company and pursue an aggressive global expansion on the bet that profits would follow has left it with a hangover.
On November 1st, 2023, WeWork's shares plunged 37% in pre-market trading following news reports that the company plans to file for bankruptcy as early as next week. The flexible workspace provider is considering filing for Chapter 11 bankruptcy protection in New Jersey.
In conclusion, WeWork's struggles are a cautionary tale for companies that prioritize growth over profitability. The company's failed IPO attempt and plunging shares are a testament to the importance of sound corporate governance and ethical leadership. It remains to be seen whether WeWork can recover from its current predicament.
Sources
(1) WeWork IPO: Timeline of Events Since Company's Failed IPO Attempt. https://www.businessinsider.com/wework-ipo-timeline-delayed-ceo-adam-neumann-scandals-explained-2019-9.
(2) WeWork’s shares plunge 37% on bankruptcy reports - CNN. https://www.cnn.com/2023/11/01/investing/wework-shares-plunge-bankruptcy-reports/index.html.
(3) undefined. https://www.bloomberg.com/opinion/articles/2021-10-21/wework-finally-goes-public-but-what-lessons-have-we-learned-from-its-ipo-fail.
(4) undefined.
(5) Why WeWork went wrong | WeWork | The Guardian. https://www.theguardian.com/business/2019/dec/20/why-wework-went-wrong.
(6) Fallout from WeWork's failed IPO shows the folly of excessive valuations. https://theconversation.com/fallout-from-weworks-failed-ipo-shows-the-folly-of-excessive-valuations-125014.
(7) undefined. https://www.reuters.com/article/us-wework-ipo-idUSKBN1WF1NS.