Some of the biggest savings have come from renegotiating leases with landlords or getting out of them. Still, WeWork has made strides in cutting its operating expenses - and hopes it will become profitable if its revenue grows. In the first half of this year, WeWork consumed $1.31 billion of cash running its operations and purchasing property and equipment, more than the $1.15 billion in the same period of 2020. WeWork’s revenue in the second quarter of this year was $593 million, well below the $988 million in revenue it reported for the first quarter of 2020, its peak quarter.Īnd this partly explains why the company is using up cash rather than generating it. But WeWork’s customers were able to cancel their much shorter-term agreements as they expired. Traditional landlords survived because tenants were legally obliged to keep paying their yearslong leases, most of which remain in effect. The pandemic, which emptied office towers around the world, also crushed WeWork’s business. SoftBank and other investors have to wait several months before they can sell their shares. “I didn’t look at WeWork right.” SoftBank has agreed to cap its voting power in the company below 50 percent.
“I made a wrong decision,” Masayoshi Son, SoftBank’s chief executive, said last year. At Thursday’s stock price, WeWork was worth about $9.5 billion, a fraction of the $47 billion valuation placed on the company before investors soured on it in 2019. It is expected to raise as much as $1.3 billion from the deal, a sum that includes stakes held by the investment firms BlackRock and Fidelity. Instead of an initial public offering, WeWork entered the public markets by merging with a special-purpose acquisition company, or SPAC, something of a craze these days. “We got here on a different road than we anticipated, but we’re here,” Marcelo Claure, WeWork’s executive chairman and a senior SoftBank executive, said in an interview Thursday with CNBC. And WeWork made it through the last two years only because of huge financial support from SoftBank, the Japanese conglomerate that is WeWork’s largest shareholder.
But the company still has lofty growth targets, big losses and many empty desks in its 762 locations around the world. WeWork has new leaders who have pared back its expenses and hope to exploit an office space market that has been upended by the pandemic. The earlier effort collided with concerns about WeWork’s breakneck growth, its huge losses and the alarming management style of its co-founder Adam Neumann.
Two years after WeWork’s attempt to become a public company flamed out spectacularly, the co-working giant started trading on the stock market on Thursday, hoping that investors will now believe in its prospects.
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