2023 has all been downhill for WeWork (NYSE:WE), as its shares have experienced a 90% decline this year. Even worse, the New York Stock Exchange (NYSE) announced this morning that it has decided to begin the process of delisting the company’s warrants, each of which is exercisable for one share of WE stock. The exchange cited the warrants’ “abnormally low” prices and Section 802.01D of the Listed Company Manual as its reasons for the delisting.
However, WeWork can still appeal the decision by requesting a review of the determination. In the meantime, the NYSE will apply to the Securities and Exchange Commission (SEC) to delist the warrants “upon completion of all applicable procedures, including any appeal by the Company of the NYSE Regulation staff’s decision.”
WE Stock: NYSE Plans to Delist WeWork Warrants
Unfortunately, WeWork has bigger issues to worry about than its warrants being delisted. In April, the shared employee space company announced that it had received a continued listing standard notice from the NYSE due to its share closing below $1 for 30 consecutive business days. WeWork had a six-month cure period to regain compliance or risk delisting from the exchange.
To regain the $1 threshold, either WE stock could naturally move above $1 or the company could enact a reverse split. The latter is the option that WeWork chose. It will conduct a 1-for-40 reverse stock split effective as of 4:01 p.m. Eastern on Sept. 1. Shareholders approved the reverse split at the company’s recent annual meeting. Fractional shares will not be issued as part of the reverse split, and any fractional shareholders will receive a cash payment instead of fractional shares.
Exchange compliance policies aside, WeWork also has to worry about its fundamental business health. During its second-quarter earnings, the company issued a bleak warning:
“As a result of our losses and our projected cash needs, which have been impacted by the recent increases in member churn, combined with our current liquidity level, substantial doubt exists about the Company’s ability to continue as a going concern.”
After losing $2.3 billion last year, WeWork reported a Q2 net loss of $397 million, improving from a net loss of $635 million year-over-year. Revenue grew by 4% to $844 million.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
