Is WeWork the End of Co-Working?
WeWork’s recent fall from grace has given investors, landlords and potential tenants pause as to the viability of the co-working model going forward. Once a private equity darling with a valuation in the tens of billions of dollars, the firm now faces an uncertain path, as the prospects of an IPO (and a $6B contingent credit line) are off the table for the foreseeable future.
The firm’s co-founder and wunderkind, Adam Neumann, is no longer CEO, and his influence on the company going forward has been severely curtailed: the voting power allocated to the firm’s Class B and Class C shares has been cut from 20 votes a share to 10 votes a share. The firm’s sole bond offering is trading with double-digit yields, and multiple rating agencies have downgraded the issue to speculative (or “junk”) status. Next on the chopping block are thousands of layoffs and divestitures of companies and technologies that WeWork acquired that are peripheral to the firm’s core business: (re)-renting office space to firms large and small.