Watch. Why is WeWork unsure about staying in business?

Co-working giant WeWork has expressed doubt about its ability to continue its business. So, why this distress signal?

The company has mentioned losses, low availability of funds, and projected cash needs as the reasons behind the same. Well, the company reported a loss of around 600 million dollars in the last six months, and it has only $680 million in liquidity available.

WeWork started in 2010 to build a “physical social network” for freelancers and remote workers. They rented out offices, offering perks and sophisticated infrastructure to attract clients and earn revenue.

Read: WeWork raises ‘substantial doubt’ about staying in business

However, things were not that rosy! Let’s look back at the company’s history. In 2017 and 2018, the company incurred losses. The company had to take a pause on plans to come out with its IPO in 2020.

The same year, Sandeep Mathrani was announced as the new CEO. Under his leadership, the company went public in 2021 through a special purpose acquisition company (SPAC) named BowX Acquisition.

A SPAC is a company created just to raise IPO funds and buy/merge with another company. The day it became public, the company’s closing price was $11.38. Today, it is less than a dollar.

Meanwhile, just 3 months into the role, Mathrani announced his departure. The company still doesn’t have a CEO. WeWork has said that it would cut lease expenses, and secure more funds through debt or equity sales or selling assets. They might also obtain “relief under the U.S. bankruptcy code.” WeWork is present in 39 countries and has approximately 90,6,000 workstations.

So, if the company does incur further losses, it might have an impact on the real estate sector. Should you be worried if you are an employee in WeWork’s India office? Karan Virwani, CEO, WeWork India, told businesline, “Any development globally has no impact on our business here.”