WeWork Is Destroyed

WeWork Inc. (NYSE: WE) was once among America’s most valuable private companies. In early 2019, it was valued at $47 billion, and investor Softbank made $1 billion, which it would regret. Today, after the office-sharing company became a public corporation, a WeWork bankruptcy happened. (See the 25 worst bankruptcies in American history.)

WeWork once had thousands of offices. It is overbuilt, and some of those offices never had tenants. However, WeWork nevertheless had to pay its building owners rent. That rent became crushing. Along with unsustainable payments, the COVID-19 pandemic emptied its offices.

WeWork is down to fewer than 800 locations across just under 30 countries. It has dozens of competitors that offer less fancy offices for less money. In part, it was WeWork’s fancy, expensive offices that injured it further. Tenants got free coffee and beer and nearly free board rooms and common spaces.

According to The Wall Street Journal analysis of what happened, “That business crumbled when demand for its desks fell and vacancies rose during the pandemic, while WeWork remained on the hook for billions in rent payments to landlords.” Its balance sheet is a wreck. It will not find the money. A WeWork bankruptcy was inevitable.

WeWork arose during a period when shared space was becoming popular, along with shared cars. Airbnb grew into a home-sharing giant. Today, some cities have regulations that will not allow customers to use the Airbnb service. Uber, which struggled, has finally found its footing. WeWork appears to be one of the three that never found its footing.

WeWork’s stock hit $130 a share earlier this year. The share price has fallen to under $1. The company’s market cap is now a mere $45 million. It has become a stock that speculators trade in the hope of making a few pennies a share.

When history looks back on unicorn companies, which are those with values of over $1 billion, WeWork will stand out because of the size of its failure.