WeWork is raising doubts about its own ability to continue staying in business, as it is worrying over its big losses, an increased member turnover, and projected need for cash. This information is as per the data released for the second quarter release of the company.
Hence, the company claimed that “substantial doubt exists” about its ability to stay in business. To address problems, the management of WeWork created a plan to improve the financial health of the company. They also added that the company’s ability to continue business is “contingent upon successful execution” over the next year.
WeWork basically provides solutions for office spaces and workspaces. It said that it would try to lower its costs of rent by negotiating more favorable lease terms. Furthermore, the company officials were of the opinion that the company would increase its revenue by reducing the number of canceled memberships as part of its turnaround plan. There is also an attempt to raise more money through debt issuance or equity securities.
The CEO of WeWork, David Tolley, added in a statement,
“Excess supply in commercial real estate, increasing competition in flexible space and macroeconomic volatility drove higher member churn and softer demand than we anticipated, resulting in a slight decline in memberships.”
In the second quarter of 2023, WeWork reported a net loss of $397 million, which is somewhat of an improvement as compared to the net loss of $635 million in the second quarter of 2022. Furthermore, WeWork’s stock also plunged more than 20% on Tuesday in after-hours trading. Since the start of 2023, the company’s stock is down 85%, which is a worrying factor.