- WeWork burned $1.4 billion in cash in the final quarter of 2019, on top of the $1.25 billion it lost in the previous quarter.
- Its main investor, SoftBank, is set to withdraw further funding, meaning that WeWork could run out of cash.
- WeWork’s business prospects will be damaged by people’s reduced appetite for working in shared offices.
WeWork is in serious trouble. The workspace company is already coming off a terrible 2019, what with its IPO being canned. Now, coronavirus has swooped in to kill it off.
Reports Friday revealed that WeWork burned $1.4 billion in cash in the final quarter of 2019 alone. That’s on top of the $1.25 billion loss it recorded in Q3 2019.
WeWork had only $4.4 billion in cash at the end of 2019. And with losses rising each quarter, it’s becoming increasingly likely that the coronavirus will strangle its attempts to recover. Especially when viruses and the threat of contagion are dampening public appetite for shared work spaces.
WeWork Could Be The First Major Coronavirus Casualty
Despite beginning the year valued at almost $50 billion, 2019 was undoubtedly WeWork’s worst year so far.
And then, just as things couldn’t get worse, WeWork almost collapsed. Its main backer, SoftBank, agreed to a $9.5 billion bailout package in October. This included stock buybacks worth $3 billion, $5 billion in new financing, and the accelerated delivery of a previously agreed $1.5 billion.
Embarrassingly, the deal valued WeWork at a paltry $5 billion. In other words, its value plunged by over 80% in a few months.
But as bad as 2019 was for WeWork, 2020 is shaping up to be even worse.
To begin with, the coronavirus has forced the global economy into a near-total shutdown. Economists are predicting either a sharp recession (at best) and a deep depression (at worst)….