Following media reports that the flexible workspace provider was going to declare for bankruptcy as early as next week, WeWork’s (WE.N) shares plunged over 50% to a record low on Wednesday.
The New York-based company, which has been experiencing significant losses and a high debt load for a few years, was formerly valued privately at $47 billion; today, its market capitalization is only roughly $121 million.
The SoftBank-backed company has suffered a number of hurdles since its initial public offering (IPO) preparations collapsed in 2019 due to uncertainty regarding its long-term lease strategy and short-term rental revenue. This prospective bankruptcy filing would come after a string of failures.
WeWork, which at last went public in 2021 at a far lower valuation than anticipated, continues to be a source of shame for SoftBank, which has invested billions to support the firm but has never made a profit.
WeWork may file a Chapter 11 petition in New Jersey, according to a Wall Street Journal report that was initially published on Tuesday.
Despite having the funds to make the payment, the company elected to postpone paying the interest on its senior notes due in 2025, which was due on November 1st, it announced on Tuesday. WeWork has already issued a bankruptcy warning in August.
“Whether or not WeWork can reach a short-term accommodation with bondholders to stave off a near-term bankruptcy, it likely holds many long-term office leases that will need to be restructured or written off,” said Jason Benowitz, senior portfolio manager at CI Roosevelt Private Wealth in New York.
“WeWork remains a significant tenant in some major urban office markets and its failure or restructuring may further weigh on industry fundamentals.”
The stock was last trading at a record low of $1.18 qfter losing about 96% of its value this year, the most recent in a run of record lows.