WeWork Inc (NYSE:WE) shares dropped 5.5% in pre-market trading in New York, reflecting the company's uncertain future.
Currently valued at $450 million, the office space giant, which SoftBank once estimated at $47 billion, has expressed significant concerns about its ongoing viability.
The company's second-quarter earnings report did not meet the expectations set three months prior.
WeWork's future now hinges on several strategies, including further restructuring and securing additional capital within the coming year.
Interim CEO David Tolley, who took over after Sandeep Mathrani's departure in May, attributed the recent underperformance to adverse economic and property market conditions.
He pointed to an oversupply in commercial real estate, increased competition, and macroeconomic instability as factors leading to a drop in memberships.
Since its unsuccessful public offering attempt in 2019, WeWork has been revamping its cash-intensive business model.
This restructuring has led to the termination or modification of 590 leases, reducing future lease obligations by approximately $12.7 billion. Tolley emphasized the company's intensified focus on optimizing its real estate portfolio.
Currently, WeWork operates in 610 locations across 33 countries with 512,000 members.
After merging with a blank-cheque company in 2021, WeWork's shares have seen a 95% decline over the past year. The company's future now depends on renegotiating leases, cost control, and raising new capital through various means.
By 8.26 am, the stock had been marked down a further 1 cent to 21 cents.