Shares in WeWork (ticker: WE) have taken a sharp nosedive as concerns grow over the short-term office rental company’s financial stability. Previously valued at a staggering $47 billion, WeWork’s stock plummeted by 37% during premarket trading on Wednesday, following an 11.6% slump the day before.
Reports from The Wall Street Journal suggest that WeWork is making preparations to file for Chapter 11 bankruptcy protection as early as next week. While the company has not officially commented on these rumors, a deal struck with bondholders on Tuesday grants them seven days to negotiate before facing a potential default on interest payments due in early October.
If WeWork were to declare bankruptcy, it would mark the latest setback in a long series of challenges for the troubled company. Once viewed as a venture capital success story, WeWork’s reputation was tarnished by the 2019 ousting of co-founder Adam Neumann and the subsequent cancellation of its planned initial public offering. As a result, WeWork was forced to go public through a merger in 2021. This fall from grace leaves WeWork’s market capitalization at a meager $75 million, a far cry from its former valuation in the tens of billions of dollars.
Despite these trying times, WeWork continues to be backed by SoftBank, albeit with diminished enthusiasm. As the future of the company hangs in the balance, investors and industry observers eagerly await updates on WeWork’s fate.