Adam Neuman –WeWork Or the Making and Breaking of a $47 Million Unicorn(Hulu Promo Pic)
WeWork, the one time next biggest thing founded by the controversial Israeli entrepreneur Adam Neumann, has reached the end of the road. The firm revealed that it will be filing for bankruptcy.
The Wall Street Journal reported that WeWork is planning on filing Chapter 11 bankruptcy payment in New Jersey next week. This news comes just one day after WeWork was forced to negotiate a delay in the interest payments to creditors on debt owed.
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 The IPO was eventually withdrawn and WeWork was taken over by SoftBank, its largest investor.
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The company once had a valuation of $47 billion. But in August, the NYSE suspended trading in the WeWork’s warrants because, said the exchange, its price was “abnormally low.” This came after the firm announced plans for a list ditch effort to save itself by offering a reverse stock split. And at that time 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.
In 2019, Neumann was forced out of WeWork, the company which he founded in 2010. After a meteoric rise, the entrepreneur was brought down after allegations of serious drug use and sexual improprieties were made. WeWork was forced to deal with sexual harassment suits. It delayed its planned IPO and laid off many workers.
But Adam Neumann reportedly walked away with a $1.7 billion deal. And so he used this money to acquire real estate and invest in a few new ventures.
The end of WeWork should not 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.
