United States: WeWork, the office space sharing company, has witnessed a significant fall in shares after the firm expressed “substantial doubt” about its future. The company’s shares fell by close to 24 percent in extended trading in New York.
According to the reports, the company’s management needed to raise additional capital to keep it afloat over the next 12 months.
WeWork, backed by the Japanese tech giant SoftBank, was significantly affected by the COVID-19 pandemic as social distancing rules led several people to work from home.
WeWork has still not managed to achieve profitability. even after workers returned to offices as pandemic restrictions eased.
The company said in a statement that it faced challenges, including “softer demand and a difficult operating environment.”
“Substantial doubt exists about the company’s ability to continue as a going concern,” the firm noted.
“The company’s ability to continue as a going concern is contingent upon the successful execution of management’s plan to improve liquidity and profitability over the next 12 months,” the statement added. The plan includes increasing additional capital through the issuance of stocks, bonds, or asset sales.
According to the statement, the management will further reduce rental costs and limit capital expenditures.
WeWork currently has 512,000 members at its workspaces in 33 countries around the world. The company’s first attempt to go public collapsed in 2019 over concerns about its business model and co-founder Adam Neumann’s leadership style. The firm has also struggled to cope with troubles in the technology sector.
Shares in the company have fallen by more than 95 percent in the last year. Recently, shares fell by almost a quarter in extended trading to $0.21.
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