Co-working giant WeWork is on the ropes. Is it finished?

Despite expansion in 2019, making global revenues almost double from $1.8bn to $3.5bn, the business also saw losses balloon by 129 per cent – which meant losses grew at a faster rate than WeWork’s income.

In the UK, for example, rental income almost doubled from £35.8 million to £68.4m. But losses in 2019 more than tripled to £231.7m.

The growth was built on WeWork signing long, expensive leases on space it rented out in a multitude of short-term deals. In so doing the company exposed itself to what insiders call a “near-ruinous” level of risk.

When Covid-19 struck, WeWork’s total membership fell by 11 per cent in the third quarter of 2020 alone.

Right now things look grim, but if WeWork is able to hold on through the crisis, it could see demand peak again as companies search for flexible spaces to accommodate a hybrid workforce.

The clock is ticking. SoftBank, who already owe 80% of WeWork stock,  pulled out of an agreement to buy $3bn of WeWork shares from early investors including Neumann – a decision that has ended up in court.

If Soft Bank’s patience has reached its limits, WeWork’s could be toast.

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