WeWork is set to report a loss of $1.5bn (£1.1bn) for this year, weeks before the company’s planned $9bn listing on the New York Stock Exchange, according to reports.
City A.M. understands that the flexible office-space provider first made investors aware of its expected losses in an earnings report in August and again in an investor presentation last week.
The unwelcome news for investors comes just weeks before WeWork’s much anticipated debut on the New York Stock Exchange through special-purpose acquisition company (Spac) BowX around 21 October.
WeWork operates over 60 office spaces in London – representing approximately one per cent of the total commercial office square footage – which, according to the company, made up over a third of the entire leasing activity in the capital in the second quarter.
Using the rise in the occupancy levels of its 762 global office sites, to 61 per cent in the three months to September, from less than half at 47 per cent during the pandemic, chief executive Sandeep Mathrani painted the picture of a company posed for a strong recovery.
But the company has lost $5bn over the last three years and has incurred costs of $793m this year alone, from closing sites and finalising a settlement with its notorious co-founder Adam Neumann, who left WeWork after its valuations plunged in 2019 and the company was forced to abandon its original floating plans.
WeWork had originally achieved a $47bn valuation in 2019 after a fundraising round led by tech giant Softbank but things unravelled quickly after its losses were revealed and its practices, including the erratic behaviour of Neumann, were questioned.
Mathrani has closed over 150 WeWork sites since the start of the pandemic in an attempt to downsize and cut the company’s losses. While he told investors the downsizing exercise was largely complete, one landlord told the Sunday Times he expected WeWork to leave even more buildings in order to get out of unaffordable leases.
While WeWork has projected that its sales will nearly triple to reach $6.79bn by 2024 and its merger with BowX is expected to give it a cash injection of $1.3bn, the company’s debts stand at $4.58bn as of June this year.