'WeWork' or 'WeCrashed': From $40 Billion to 'Going Concern'

WeWork's stock has been trading below $1 since mid-March. It tumbled over 23% to 16 cents in extended trading on Tuesday and now has a market cap below $500 million. The company had a net loss in the first half of the year of $700 million after losing $2.3 billion in 2022. As of June 30, it had $205 million in cash and equivalents and total liquidity of $680 million. It has $2.91 billion in long-term debt.

Key factors for whether WeWork can remain a going concern include limiting capital expenditures, increasing revenue and seeking capital through debt or equity issuance.

WeWork's CEO Sandeep Mathrani, who took over the troubled company in 2020 and recently led its financial restructuring, stepped down in May, leaving the company without a permanent successor. Analysts are questioning the viability of WeWork, which has spent billions of dollars building a business that has never come close to breaking even. Its stock is down more than 95% from October 2021 when it secured a stock market listing through a merger. The company's fate rests with SoftBank, which has invested nearly $12 billion in WeWork and is its largest shareholder. A collapse of WeWork could be a "systematic shock" to the weak commercial real estate sector in New York, San Francisco, and other cities.

Ratings agencies have a gloomy view of WeWork. In March 21, S&P downgraded WeWork's "issuer credit rating by three notches, to CC, after it reached a deal to cut its debt by roughly $1.5 billion and extend some maturities," noted the Journal.

Meanwhile, Fitch cited negative earnings before interest, taxes, depreciation and amortization, and free cash flow when downgrading WeWork's credit rating two notches to C. WeWork declined to comment, according to the Journal.

However, WeWork is optimistic about its strategy.