Following months of massive cost-cutting initiatives, New York City-based co-working company WeWork said it is on track to meet its goal of achieving operating profitability and positive cash flow by 2021, a year ahead of schedule.
WeWork executive chairman Marcelo Claure told reporters in an interview that since the start of the COVID-19 pandemic, WeWork has seen strong demand from companies seeking new spaces to serve as satellite offices for their employees. Companies who signed new leases with WeWork include Citigroup, Mastercard, and Microsoft.
However, Claure also mentioned that revenues had been stagnant in the second quarter of 2020 due to tenants either terminating their leases or failing to pay rent.
Claure, who is also a SoftBank Group executive, was appointed as executive chairman of WeWork after Adam Neumann, the company’s founder and chief executive officer, resigned from his post in September of 2019 reportedly upon the request of SoftBank — WeWork’s largest investor — over concerns regarding the company’s financial situation, his management style, and several conflicts of interest.
A week after Neumann’s resignation, WeWork announced that it would be withdrawing the S-1 filing for its highly-anticipated IPO. A month later, SoftBank took control of 80 percent of WeWork as part of a rescue financing plan.
In November of 2019, WeWork announced a five-year plan to reverse its substantial losses and introduced a slate of new executives to run the company, following a string of high-profile departures involving at least a dozen top officials.
In the months that followed, WeWork cut more than 8,000 jobs, sold off non-core businesses such as Flatiron School, Teem, and The Wing, and terminated its leases on spaces in Baltimore and New York.
WeWork’s financial and management woes in 2019 caused its valuation to drop from around $47 billion in early 2019 to just $2.9 billion in March of 2020.
In April of 2020, Softbank said it expects to lose a staggering $24 billion on investments through its Vision Fund, citing WeWork’s 2019 implosion as one of the main reasons.
That same month, two WeWork board members sued SoftBank Group Corp on behalf of the company after the Japanese conglomerate failed to push through with a deal to buy $3 billion in WeWork’s shares.
In July of 2020, The We Company, WeWork’s parent company, asked a judge for the lawsuit’s dismissal after an independent committee comprised of directors unaffiliated with SoftBank concluded that Lew Frankfort and Benchmark’s Bruce Dunleve, members of the company’s special committee, “never had the authority and should not have authority” to file a lawsuit in the name of The We Company.