WeWork Inc (NYSE:WE), the office space provider, could be on the brink of collapse as it continues to struggle with losses, requiring more cash to improve liquidity levels, a second-quarter earnings report said.
“As a result of the company’s losses and projected cash needs, combined with increased member churn and current liquidity levels, substantial doubt exists about the company’s ability to continue as a going concern,” the group’s statement read.
Revenues lifted 7% year-on-year to reach US$1.6 billion in the first six months of 2023, however, the US firm reported an underlying loss of US$65 million, an improvement from the US$346 million loss made in the same period in 2022.
Having US$680 million in liquidity, made up of US$205 million in cash and US$475 million in delayed drawn financing, success for the company over the next year now requires it to:
- Reduce rent and tenancy costs
- Up revenue through reducing member churn and finding new sales
- Implementing a cost-reduction programme where capital expenditure is limited
- Obtain additional capital via debt, equity or security sales
“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,” said David Tolley, interim chief executive officer.
Tolley took over from former boss Sandeep Mathrani in May, after the Indian executive was brought into the company to cut costs, having joined the business at a time when operations were struggling, largely due to the pandemic-led shift to online working.
WeWork is down over 16% in pre-market trading on Wednesday, having closed in the US at US$0.21.