WeWork warns it has 'substantial doubt' about whether it can keep going as a business
In its second quarter earningson Tuesday, the company said there's"substantial doubt" about its ability to keep going as a business.
The company issued what's known as a"going-concern" warning. Publicly traded companies typically issue these when they're worried, broadly speaking, that they don't have the money to pay their bills over the next year, an S&P Global report on the topicAs for WeWork, its statement pointed to"losses and projected cash needs, combined with increased member churn and current liquidity levels.
"Although we have more work to do, the talent and energy of the WeWork team is extraordinary and we are resolutely focused on delivering for our members for the long term," David Tolley, the company's interim CEO, said in a statement."The company's transformation continues at pace, with a laser focus on member retention and growth, doubling down on our real estate portfolio optimization efforts, and maintaining a disciplined approach to reducing operating costs.
He pointed to what he called"excess supply" in commercial real estate, along with increased competition when it comes to offering flexible work space, as challenges for the business that led to higher member turnover and softer-than-expected demand. The company also reported a decline in memberships.
The warning doesn't mean anything immediately changes for WeWork customers."We are confident in our ability to meet the evolving workplace needs of businesses of all sizes across sectors and geographies, and our long term company vision remains unchanged," Tolley said.It also outlined a plan for the coming year that it said will include reducing rental costs, raising capital, and increasing revenue by improving sales and reducing the number of canceled memberships.
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