WE (NYSE:WE) failed.
WeWork, the co-working empire once worth $47 billion that inspired the mini-series WeCrashed, is expected to file for bankruptcy next week.
Rumors of a bankruptcy filing have been swirling around the company for months since a new board team began negotiating with creditors.
The move was further telegraphed in mid-October by the hiring of bankruptcy expert Paul Keglevic as board chairman, alongside CEO David Tolley.
WE stock plunged over 40% overnight, opening this morning at about $1.37 per share. This comes after a 1-for-40 reverse stock split executed in September.
We Gone, We Done
WeWork stands as one of the great cautionary tales of the last decade, although founder Adam Neumann came out OK.
That’s because Neumann maintained voting control of WeWork even after a failed initial public offering (IPO) in 2019. He wound up getting $480 million from private equity partner Softbank (OTCMKTS:SFTBY) in 2021. He still has a fortune of $2.2 billion, according to Forbes. His new real estate start-up is called Flow.
Softbank and those who invested in the company’s 2021 IPO wound up with losses. The stock is down over 99% from that March 2021 debut. The Covid-19 pandemic and the work-from-home trend, which have crashed commercial real estate, are blamed for the final fall.
Softbank has lost over half its value since early 2021. It took a $32 billion write-down on its “Vision Fund” in August. WeWork was one reason for the write-down. CEO Masayoshi Son, who once thought he could take over the tech world with Saudi money, is now widely ridiculed.
WE Stock: What Happens Next?
WeWork bondholders, landlords and stockholders will all take losses. WeWork had long-term debt of $2.9 billion in June and over $13 billion in long-term leases. Its market capitalization as of early trading today was about $60 million.
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As of this writing, Dana Blankenhorn 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.
