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wework collapse bankruptcy

Is this finally the end? WeWork Faces Bankruptcy, Stock Plummets 40%

news real estate Nov 01, 2023

WeWork stock crumbled nearly 40% in premarket trading after the Wall Street Journal released a report that the company was filing for bankruptcy 'as early as next week.' After getting revived on the public markets, are we finally reaching a true conclusion to this wild saga?

What Happened

Back at the beginning of October, WeWork missed interest payments due to their bondholders. There's a 30-day grace period associated with those missed payments, but with that deadline rapidly approaching, it appears WeWork will have to file for Chapter 11 in New York and New Jersey instead of making up for those missed payments.

From $47 Billion To Zero

This is the end of a long decline for WeWork's second life. The flexible lease company had planned on renegotiating leases with landlords across the back half of this year, and trouble really started brewing in August when 3 board directors left the company on bad terms. WeWork churned through $530 million in expenses for the first 6 months of the year and in their latest filing only had ~$200 million of cash remaining. With WeWork on the hook for about $10 billion in leases across the next 4 years, that's a pretty dire margin to deal with.

Why It Matters

The real estate business has been in a lot of trouble for the past year, with commercial real estate being a particular focus for market fears. WeWork's potential bankruptcy here is merely a confirmation of how weak the space is. WeWork's situation was particularly mismanaged though, so Wall Street isn't seeing this as an excuse to have a wider panic about commercial real estate writ large. This is simply the sad end to one of the poster cases of how crazy the market got during the zero-interest-rate days. WeWork stock fell 47% in early trading as investors fled one final time, with the stock down 99.42% since their initial IPO.