TOPLINE Embattled co-working giant WeWork lost $2.1 billion and more than one in four of its customers during the first quarter, according to the Financial Times, as the coronavirus pandemic and a nine-figure settlement with former CEO Adam Neumann placed strain on the company as it prepares a second try at going public later this year.
KEY FACTS
The company’s revenue fell by half compared to the first quarter last year, according to the FT, dropping from $1.1 billion to $598 million as it shed 200,000 customers, accounting for roughly a quarter of its membership.
The first-quarter losses also include Neumann’s settlement earlier this year, which saw the ousted founder walk away with about $500 million, according to media reports.
WeWork outspent itself as the company shuttered unprofitable locations: Between the first quarter of 2020 and the first quarter of 2021, restructuring-related costs swelled from $56 million to $494 million, according to the FT.
WeWork hopes the one-time expenses to unload locations will help the company meet its goal of profitability, and told potential investors in March that annual revenues would soar as coronavirus infections slow down, estimating that the company would go from earning $3.2 billion in 2020 to a staggering $7 billion by 2024, according to the FT.
The firm’s tough quarter comes as new CEO Sandeep Mathrani cuts costs to prepare for a second shot at going public later this year via a SPAC merger with BowX Acquisition Corp.
WeWork said the company would be valued at $9 billion, including debt, with the SPAC deal that would include a $483 million investment from BowX.
KEY BACKGROUND
WeWork’s first-quarter cash fall is only the latest stumbling block for the company. In 2019, WeWork’s first attempt at going public failed after the company pulled its $20 billion initial public offering at the last second, sending the valuation tumbling. Neumann stepped down later in 2019, and sued the company he founded the following year after SoftBank, WeWork’s largest shareholder, tried to back out of a $3 billion deal to buy WeWork shares from Neumann and other early employees. In 2021, the coronavirus pandemic and ensuing lockdowns battered the company even further as much of the world’s workforce worked from home.
FURTHER READING
WeWork loses $2.1bn and a quarter of its members as lockdowns bite (Financial Times)
By Carlie Porterfield, Forbes Staff