It looks like it isn't just WeWork's now-pulled IPO that's toxic at the company - a new report by Business Insider says that the company emailed its tenants on Monday telling them that there was "potentially elevated levels of formaldehyde" in phone booths throughout WeWork offices in the U.S. and Canada.
Why they used the word potential is quizzical - according to the report, the company admitted that "tests for high levels of formaldehyde came back positive late last week."
The email stated that the company was removing 1,600 phone booth from locations that "may be impacted" in addition to 700 other booths that have yet to be tested for formaldehyde. At some WeWork spaces on Monday, there were taped signs reading: “CAUTION: DO NOT USE” over the phone booths.
The company stated in its email that it had received complaints of "odor and eye irritation". The EPA says that formaldehyde can cause respiratory symptoms and eye, nose and throat irritation.
Colleen Wong, a tenant at WeWork's Rosslyn location in Arlington, Virginia said: "I always noticed, from the first time I entered a phone booth, a strong chemical odor. I assumed it was a new building / equipment type smell. Kind of like glue or a new car."
“They had a chemical smell, like when you get something new in the mail,” a WeWork member from Minneapolis told Bloomberg.
Another customer who uses the WeWork phone booths in Seattle told Bloomberg: “My only concern is how many more times
WeWork can hit itself in the face, reputationally speaking. It’s not great when you worry about your landlord’s future.”
WeWork says the high formaldehyde levels are the fault of the manufacturer of the phone booths.
It's been a rough few months for WeWork to say the least. After the company's historic IPO collapse, we reported just days ago that the company could run out of cash by next month and was searching for a lifeline. Perhaps the uncovering of excess formaldehyde, often used for embalming the dead, will prove to be symbolic of the company's future.
No word yet on whether or not Whitney Tilson has presented this formaldehyde issue as a short thesis in a 300 page slide deck anywhere. Regardless, we hope WeWork didn't use Lumber Liquidators for its flooring...