The WeWork implosion continues to unfold spectacularly. The company, slated 1.5 months ago as a top Wall Street IPO candidate at a valuation of more than $40 billion, has seen its valuation collapse to $8 to $10 billion range and has had SoftBank bailout it out from near bankruptcy.
As the struggling office-sharing company slashes jobs, closes locations, and restructures to avoid eventual bankruptcy, its "cost-cutting" measures are kicking into overdrive as another 2,400 employees globally have been laid off, reported Bloomberg.
"As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization," a company spokeswoman said in a statement.
"This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition," the New York-based company added.
The latest cut represents about 17% of the company's global workforce, which totaled 12,500 as of June.
Most of the cuts are likely from Europe, the Middle East, and Africa, which we detailed earlier this month that employees in those areas were briefed on the restructuring.
The London and Hong Kong subsidiaries of WeWork are also rethinking their expansion strategies after the company had to make drastic changes to its operating model to avoid collapse.
And judging by the collapse of the company's forward-looking jobs posting, this is no longer a 'growth' company, but a 'survive' company...
But the epicenter of its collapse could be in its Chinese subsidiary, once valued at $5 billion in 2018, now likely headed to zero.
Sources recently told the Financial Times that WeWork locations in China have been severely underperforming, to the extent that occupancy levels are absolutely disturbing.
"WeWork locations in Shanghai, where it has installed 43,600 desks, had a vacancy rate of 35.7% in October. In Shenzhen, where the company has 8,000 desks, 65.3% were vacant, while 22.1% of the group's 8,900 desks in Hong Kong sat unfilled. The company was also expanding in central China, with multiple offices in Xi'an. There, it suffered a vacancy rate of 78.5%."
The SoftBank led bailout of WeWork is to boost occupancy rates above 90% and generate more cash flow so the company can survive the next global trade recession.
WeWork's explosive push into emerging markets is one of the reasons the company is suffering. WeWork, co-founded by former CEO and chairman Adam Neumann, definitely not keen on business cycles, over expanded in regions that are getting clobbered in the global synchronized slowdown. Some of these areas aren't just in China, but also in other parts of Asia and South America.
WeWork posted disastrous Q3 earnings. Financial statements showed the company lost $1.25 billion.
As far as WeWork 2025 bonds crashing to new lows, no turnaround in WeWork is visible yet.