WeWork Stock Price Plummets Over 99% in Two Years: What Caused It?

The share price of coworking space provider WeWork continues to decline amid the company's struggles. This share price drop is due to the company's substantial debt and losses.

According to Yahoo Finance, WeWork Inc. (WE) shares fell 24.68% to US$0.83 per share on Friday (3/11/2023).

The share price of the company backed by SoftBank Group has plummeted approximately 99.82% compared to its first closing day on the New York Stock Exchange (NYSE) on October 21, 2021, which was at US$471.2 per share.

WeWork's share price has been significantly down since the end of 2022, as shown in the graph above.

Most recently, WeWork filed for bankruptcy protection in the US Federal Court in New Jersey on Monday (6/11/2023). WeWork stated that the bankruptcy filing is part of a "comprehensive reorganization" of the company's business.

The company said that creditors holding 92% of its secured debt have approved a restructuring plan that includes reducing its office rental portfolio or branches.

“As part of today’s filing, WeWork is seeking the ability to reject leases for certain locations, many of which are underutilized, and all affected members have received prior notice,” the company said in a statement, as reported by The New York Times, Monday (6/11/2023).

In September 2023, WeWork said it would begin renegotiating all its branches and closing some offices. On its website, WeWork lists a total of 660 branch locations in 37 countries, down from 764 locations in 38 countries about two years ago.

According to The New York Times, WeWork's collapse is a major blow to startups that have leased a significant portion of their space to the company. In recent years, several WeWork branches have struggled to pay debts related to their buildings. This was fueled by the COVID-19 pandemic, which resulted in fewer employees going to the office.

Citing Reuters, Wednesday (1/11/2023), WeWork had net long-term debt of US$2.9 billion at the end of June 2023 and over US$13 billion in long-term leases. This comes at a time when rising borrowing costs could hurt the commercial real estate sector.

WeWork's bankruptcy filing will mark a significant decline in the company's value, which was US$47 billion in 2019. This could be a major setback for SoftBank investors who have lost billions of dollars due to this startup.