WeWork Reports $2.1 Billion Loss in Q1

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Shared office company WeWork recorded a massive loss in the first quarter of this year. This is attributed to the impact of COVID-19, a settlement payment to the former CEO, and one-time costs used for asset restructuring.

According to major foreign media on the 20th (local time), WeWork announced a loss of $2.06 billion in the first quarter of this year (2021.01~03). This is four times higher than the $5.56 million loss in the same period last year, which was directly hit by COVID-19.

Quarterly revenue decreased by nearly 50%, from $1.1 billion to $5.98 million during the same period.

Along with the performance, the number of members, considered a key management indicator, also deteriorated significantly. The number of members dropped by 200,000, from 693,000 in the same period last year to 490,000. The vacancy rate slightly improved. WeWork recorded an occupancy rate of 47% in the previous quarter, but it rose by 3 percentage points to 50% in this quarter. Earlier last year, the occupancy rate was recorded at 72%.

Major foreign media analyzed, "WeWork's first-quarter loss is due to various one-time costs, including office closures caused by COVID-19 and other restructuring." It is also reported that a significant cost of about $5 million was incurred in the settlement with former WeWork CEO Adam Neumann. SoftBank, a major shareholder of WeWork, had been in conflict over stock transactions with former CEO Neumann but reached a settlement in February.

Under Sandip Matrani, who took office as CEO in February last year, WeWork is striving to get back on track operationally and financially, excluding one-time losses. A WeWork official told major foreign media, "WeWork currently has secured $2.2 billion in liquidity," adding, "From the first quarter of last year to the first quarter of this year, operating expenses including selling and administrative expenses were reduced by nearly half to $274."

Meanwhile, after a failed initial public offering (IPO), WeWork is pursuing a backdoor listing through a merger with a special purpose acquisition company (SPAC). WeWork plans to merge with SPAC BowX and go public. Through this, it aims to raise a total of $1.3 billion from funds operated by Inside Partners and Fidelity Management. The current evaluated corporate value is about $9 billion, which is one-fifth of the $47 billion valuation at the time of the large-scale investment from SoftBank in 2019.

This content was produced with the assistance of AI translation services.