The once highly anticipated office space sharing business WeWork’s stock has plummeted after it cast “substantial doubt” on its future.
In late trading in New York, the company’s shares decreased by about 24%.
The company noted that in order to maintain operations for the following 12 months, management would need to raise extra funds.
Because of social distance laws that forced individuals to work from home, WeWork, which is backed by Japanese tech giant Softbank, was severely impacted by the pandemic.
Even while employees started returning to their offices after the coronavirus limitations were lifted, it has yet to become profitable.
WeWork stated in a statement on Tuesday that company was facing difficulties, such as softened demand and a “difficult” operating climate.
The company’s ability to continue as a going concern is seriously questioned, according to the firm.
The statement also stated: “The Company’s ability to continue as a going concern is contingent upon the successful execution of management’s plan to improve liquidity and profitability over the next 12 months.”
The strategy calls for obtaining more funds through the sale of assets, the issuing of stocks or bonds, or both.
According to WeWork, management will also take action to lower leasing prices and keep capital expenditures to a minimum.
At the moment, WeWork has 512,000 members using its workplaces in 33 different nations.
2019 saw the failure of the company’s initial effort to go public due to issues with its business model and co-founder Adam Neumann’s management style.
Two years later, in a deal that valued WeWork at $9 billion, it was listed. That was nearly a sixth of the value predicted for 2019.
The business has had a hard time adjusting to problems in the IT industry.
This year has seen the departure of a number of key executives, including Sandeep Mathrani, the former chairman and chief executive.
WeWork announced in March that it has agreements with Softbank and other investors to cut its debt by about $1.5 billion.
Over the past year, shares of the company have decreased by more than 95%. In Wednesday’s late-night trade, shares decreased by roughly 25% to $0.21 (£0.16).