WeWork Offices Tel Aviv Company Pic
The New York Stock Exchange has delisted WeWork, the one time next biggest thing founded by controversial entrepreneur Adam Neumann. The NYSE said it suspended trading in the company’s warrants because its price was “abnormally low.” The NYSE has a $1 per share minimum price requirement and WeWork’s shares had fallen to just $0.13.
The company once had a valuation of $47 billion. But just a few weeks ago even WeWork’s board said that the firm was in danger of closure.
Apparently, a reverse stock split announced by WeWork which would turn every 40 shares outstanding into just one new share did not succeed in staving off the inevitable. Many observers saw last week’s announcement of a reverse stock split as a desperate move by the firm which only recently stated that it was in danger of going bankrupt.
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WeWork stated that it would not appeal the move suspending trading of its warrants. Warrants are an equity derivative that gives the right, but not the obligation, to buy or sell a company’s shares.
The reverse stock split was not to go into effect until September 1, 2023.
The end of WeWork should not really come as a surprise. WeWork never really had a viable business model. Office space sharing comes with quite a lot of risk. First, the company needs to fork over the money to lease all of that office space, even before it has any guarantee of subletting it all. Then, you have to find people willing to work in open spaces with a bunch of strangers.
WeWork has suffered from numerous problems in recent years, especially due to the Covid crisis. Since everyone had to work from home for the duration, no one was renting shared office spaces.
But WeWork’s real problems began in 2019 when founder Adam Neumann was forced out of the company which he founded in 2010. After a meteoric rise, the entrepreneur was brought down due to allegations of serious drug use and sexual improprieties. WeWork was forced to deal with sexual harassment suits. It delayed its planned IPO and laid off many workers.
WeWork was founded in 2010 by Adam Neumann and Miguel McKelvey. The company quickly grew and became a unicorn, reaching a valuation of over $47 billion in 2019. However, WeWork’s IPO in 2019 was met with controversy due to concerns about its financials and corporate governance. The IPO was eventually withdrawn and WeWork was taken over by SoftBank, its largest investor.
