WeWork Inc. shares fell as much as 42% in premarket trading following a report in the Wall Street Journal that the company plans to file for bankruptcy.
WeWork may file its Chapter 11 petition in New Jersey as early as next week, the Journal reported, citing people familiar with the matter who it didn’t name.
The company had one of the most dramatic trajectories of the last startup boom — reaching a valuation of $47 billion before a disastrous attempt at an initial public offering and challenges to its co-working model during the pandemic.
The shares declined to as low as $1.33 in early trading before US markets opened on Wednesday. The stock had closed down 12% to $2.28 on Tuesday giving it a market value of $165.7 million.
A spokesperson for the company said it would “not comment on speculation,” and pointed to a Tuesday filing, which said WeWork had been holding discussions with creditors about “improving its balance sheet” and taking steps to “rationalize its real estate footprint.” On Monday, the company entered into a forbearance agreement with its creditors that will end in seven days.
The forbearance agreement will give the company “time to continue in the positive conversations with our key financial stakeholders and engage with them to implement our ongoing strategic efforts to enhance our capital structure,” said the spokesperson, adding that the company has “a clear, long-term vision for the future.”
The New York-based co-working company debuted in 2010, just as the market for venture capital was beginning a decade-long boom. With co-founder Adam Neumann as its charismatic pitchman, WeWork raised billions of dollars and grew rapidly, often doubling in revenue each year. At its peak, it was one of the country’s most valuable startups and operated offices around the world.
It also dabbled in somewhat tangential projects, like a private elementary school called WeGrow, two residential buildings called WeLive, and a gym concept called Rise By We.
