WeWork stock is plunging in pre-market trading on Wednesday after reports said the company is on the cusp of filing for bankruptcy. News of its impending bankruptcy announcement sent WeWork shares to an all-time low. Here’s what you need to know.
What’s happened? Yesterday The Wall Street Journal reported that WeWork plans to file for bankruptcy as early as next week. It cited sources familiar with the matter who said the company is considering whether to file for Chapter 11 bankruptcy protection in New Jersey. WeWork has not commented publicly on the report as of the time of this writing, but as Reuters notes, WeWork yesterday announced it would withhold some interest payments on some of its debt.
How have WeWork investors reacted to the news? Horribly. As of the time of this writing, WeWork shares (ticker: WE) are trading at $1.43 per share in pre-market. That’s a drop of over 37% since news of the bankruptcy consideration broke. WeWork stock has now lost 96% of its value this year alone.
What is the company worth now? As of yesterday’s closing price of $2.28 per share, WeWork had a market cap of around $120 million. That is a far cry from $47 billion, company’s reported valuation back in 2019. WeWork’s current valuation is also bad news for SoftBank, which has sunk tens of billions of dollars into the company.
Is news of a possible WeWork bankruptcy surprising? Not really. The company has lost numerous executives this year, and in an August filing to the Securities and Exchange Commission (SEC), the company said, “Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern.”
So, what happens now? Nothing yet. That’s because WeWork hasn’t officially confirmed it is filing for bankruptcy. If the Journal‘s sources are correct, that confirmation could come by next week. Fast Company has reached out to WeWork for comment.