"As a result of our losses … substantial doubt exists about the company’s ability to continue as a going concern."
According to The Wall Street Journal, the co-working space provider is facing massive losses and shrinking cash as a result of changes to how people work.
The outlet noted that the company’s losses in the second quarter were caused by an “…excess supply of commercial real estate, increased competition for flexible space, and uncertain economic conditions.”
David Tolley, Interim Chief Executive Officer said in WeWork’s quarterly report that the company has faced lower demand with memberships falling during the last year. “As a result of our losses…which have been impacted by the recent increases in member churn…substantial doubt exists about the company’s ability to continue as a going concern.”
The company’s stock is down over 95 percent since it was publicly listed, and its largest financial backer SoftBank has already lost billions on its investment. Following the company’s warning in its quarterly earnings report on Tuesday, shares fell 29 percent in after-hours trading.
WeWork said that its ability to continue to survive depends on the “successful execution of management’s intended plan over the next twelve months.”
The company previously attempted a debt restructuring deal with SoftBank and other creditors in an attempt to bolster the company’s finances in order to survive the downturn.
According to the report, WeWork plans to improve liquidity and profitability by cutting costs through restructuring and renegotiating leases, reducing member loss, and increasing sales as well as looking for additional capital through the issuance of debt, additional shares, or by selling assets.
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