Up until late 2019, WeWork was regarded as a highly successful startup that would likely grow to become one of the world’s largest companies. It provided various businesses with shared workspaces, removing the need for them to rent separate locations and improving overall efficiency. In August, the company conducted an initial public offering with a massive $47 billion valuation. However, the accompanying audit exposed many severe issues that surrounded the business’s operations, and its stocks plummeted as a result. Moreover, recent events have further undermined the already volatile company, and its future appears to be dire. This paper will detail the issues that currently affect WeWork and attempt to predict its future.
The company’s rapid growth since its 2010 founding is, in large part, the result of the resources that it obtained from SoftBank, a Japanese conglomerate known for investing in promising ventures such as Uber. Despite the company’s struggles ever since the IPO, it decided to bail WeWork out with an additional $3 billion in the fall of 2019. However, as further investigations uncovered the startup’s problematic practices, the organization’s commitment started to waver. In the middle of March, it canceled the deal, on which WeWork had grown increasingly reliant in the meantime. Its prospects, which were already not promising, began getting worse, with people starting to consider the possibility of bankruptcy.
However, another problem emerged shortly, one that will likely push the company beyond the point of no return and guarantee its ruination. With the ongoing COVID-19 pandemic, shared workspaces are becoming increasingly dangerous, as they can spread diseases very effectively due to the crowded environment and surface contamination. Soon, rumors that employees who worked in WeWork’s buildings had the virus spread and were eventually at least partially confirmed. As a result, businesses began vacating its premises and shifting to work-from-home models, further damaging the company’s revenue. Due to the current state of the epidemic, they are unlikely to return anytime soon. As such, with no income or source of financing alongside dramatic losses, there appears to be no way out for WeWork.
While bankruptcy appears to be unavoidable for the company, it may keep existing in some form afterward. WeWork has shown that the shared office space model may be viable, and its unprofitability issues can be blamed on the incompetence of its former management. As such, some larger business may buy it out after bankruptcy and retain it as a subsidiary. However, in doing so, that organization would be taking on considerable risk, and the current silence regarding a bailout for WeWork indicates that there is no interest in such an act at the moment. Moreover, due to the financial impact of COVID-19, businesses may be less willing to take on potential liabilities than ever.
Overall, WeWork was an ambitious project but is likely to enter history as a dramatic failure. There may be some potential in the idea, but the business has been mismanaged massively since the beginning and most likely cannot recover. Moreover, the refusal of SoftBank to hold to its deal and the current pandemic have affected WeWork particularly strongly due to its financial state and the specific nature of its business model. As a result, bankruptcy seems unavoidable for the company, and the topic of interest is its fate after that. Unless some business chooses to purchase all of WeWork’s assets at once during liquidation and continue its operations despite the numerous risks, the company will be gone entirely.