It has been a span of two years since our previous coverage of WeWork, a former co-working unicorn startup once valued at an impressive $40 billion by SoftBank, now standing as a symbol of the Silicon Valley tech bubble.
Two years have passed since our last coverage of WeWork, a former co-working unicorn startup that had received a colossal $40 billion valuation from SoftBank and now stands as a symbol of the Silicon Valley’s tech market volatility. In November 2021, WeWork, already facing challenges, documented an astonishing $1 billion surge in losses during its inaugural quarterly report as a publicly traded entity. Nearly two years later, the situation hasn’t notably improved for the beleaguered firm. Recent revelations indicate growing instability for WeWork.
In a submission to the Securities and Exchange Commission (SEC) on Tuesday, WeWork expressed uncertainty about its ongoing operational sustainability.
In the filing, WeWork stated, “The losses and negative cash flows resulting from our operating activities cast significant uncertainty on our capacity to persist as a viable going concern.”
The company also added:
“If we are unable to enhance our liquidity position and the profitability of our operations, we may be compelled to explore various strategic options. These could encompass debt restructuring or refinancing, pursuing extra debt or equity capital, curtailing or postponing our business endeavors and strategic projects, divesting assets, engaging in other strategic transactions, or adopting measures such as seeking recourse under the U.S. Bankruptcy Code.”
Over the course of its thirteen-year existence, the New York-based firm has encountered a series of setbacks and misfortunes. As highlighted in our coverage from October 2019, WeWork underwent significant challenges including a workforce reduction of a quarter of its 12,500 employees, the ousting of its CEO Adam Neumann, and the abandonment of its planned initial public offering (IPO).
Before transitioning into the public markets, WeWork amassed an impressive funding total of over $20.6 billion across 17 funding rounds. Its most recent injection of funds occurred on August 14, 2020, through a Debt Financing round. This financial backing stems from a group of 18 investors, with prominent names like SoftBank and Goldman Sachs appearing as the latest contributors.
By January 2020, investors were well aware of the uncertainties looming over WeWork and took precautionary measures following the IPO debacle. At that time, Reuters reported on the situation, stating, “Over a dozen Silicon Valley lawyers, entrepreneurs, and venture-capital investors informed Reuters that in the wake of the ill-fated IPOs of embattled companies like WeWork, investors have been seeking safeguards for their initial investments in ‘unicorns’—private firms valued at $1 billion or more.”
Following the failed IPO attempt in October 2018, SoftBank stepped in to take control of the struggling real estate startup WeWork. This move resulted in a considerable drop in valuation, from an initial $47 billion to a reduced range of $7.5 billion to $8 billion. By November 2019, WeWork reported a net loss of $1.25 billion, surpassing its revenue. Notably, the third-quarter loss more than doubled compared to the same period in the previous year.