WeWork shares have worst month in history

The shares of WeWork, the only coworking company listed on the New York Stock Exchange, are going through their worst month since the company went public in October 2020, with a cumulative decline of 48.91% in the last month of the year.

“Perhaps the most sensible thing for shareholders would be to wait and see if the bottom is close, but if there are no improvements in the operational part (that imply upcoming profits), the option of taking the loss and forgetting it could gain validity,” said Carlos Hermosillo, a specialist independent stock market

So far in 2022, their titles have lost 83.60% and went from $8.6 to $1.41 per unit.

WeWork is dedicated to the rental of shared spaces (physical or virtual) for freelancers, entrepreneurs and employees who have partial and total teleworking modalities. It operates through subscriptions that allow its clients to make use of its facilities and infrastructure.

Despite the year-on-year increase of 22.9% in the number of physical subscriptions in the third quarter of the year and an increase from 59 to 71% in the occupancy of its properties for the same period, the company fails to divert the attention of investors from million-dollar losses.

Since its listing on the NASDAQ, WeWork has not been profitable in the nine quarters that it has reported to the Stock Market, accumulating a loss of 8.567 million dollars). Between July and September 2022, they reported losses of 629 million, despite a 23.6% growth in their quarterly income and 30% in their income obtained through their memberships.

Carlos Hermosillo said that “the business model has not been able to be profitable because it has not reached the critical mass that the company requires, given the economic context, but also due to the change in the nature of the demand, the supply of spaces and the competition of new entrants.

Critical mass refers to the point at which a growing business becomes self-sufficient and requires no outside investment to be viable.

The company founded by Adam Neumann made its first attempt to go public in 2019 through an Initial Public Offering. At the time, its valuation stood at $47 billion, but investor doubts lowered the valuation to $10 billion. Major shareholders canceled the departure of it as a public company, and Neumann resigned as CEO.

The firm was listed through a special purpose acquisition (SPAC), following an agreement to combine its business with BowX Acquisition for $9 billion.

victor.barragan@eleconomista.mx