US WeWork (Ticker WE), which stood in the midst of the global market ‘sharing economy’ craze with a shared office rental business, entered the process of delisting from the New York Stock Exchange on the 22nd (hereinafter Eastern Time) . As the preference for working from home took hold in the wake of the COVID-19 pandemic from China, it failed to find a breakthrough right away. The fact that major companies in Wall Street and Silicon Valley, despite emphasizing the office commuting system, are adopting a mixed work format such as going to work three times a week in the face of opposition from employees is an example of the preference for working from home.
After the New York Stock Exchange closed on the 22nd, WeWork filed an application for delisting prior to the US Securities and Exchange Commission (SEC), citing that the stock price was “abnormally low.” WeWork warrant shares were suspended from trading after this day. A warrant is a security with the right to buy a specified number of shares at a specified price.
On the 23rd, when the news of the delisting application spread, WeWork’s stock price fell 5.97% from the previous day, ending trading at $0.12 per share. WeWork’s share price has been on a downward trend since the company said in a filing with the SEC earlier that “operating losses and negative cash flow cast significant doubt on its ability as a business .” Last year, the stock price fell by about 84%, and as a result of an additional plunge of more than 90% this year alone, WeWork stock has turned into a so-called penny stock (coin stock).
WeWork went public on the New York Stock Exchange (NYSE) in October 2020. At the time, as office, accommodation (home), and car sharing services became popular, WeWork, along with Airbnb (ABNB), a shared lodging company, and Uber (Uber), a ride-sharing service, were considered as the leaders of the sharing economy. In the past, Japan’s Softbank Group valued WeWork at up to $40 billion.
Afterwards, less than six months after WeWork went public, the company faced unpredictable bad news. Corona 19 started to spread around the world in earnest from March 2021, and as people started working from home, WeWork sales began to shake.
‘Sharing economy leader’ Airbnb stock price trend throughout the yearAs ‘return to daily life’ began in earnest from last year, companies gradually increased the proportion of office workers . This is in contrast to Airbnb, a shared lodging company, posting its first annual net profit since its establishment in 2008 in the fourth quarter of last year thanks to a sharp rebound in sales.
WeWork lost $2.3 billion last year and recorded a net loss of $700 million in the first half of this year (January-June). Although companies gradually increased the proportion of office workers, WeWork’s management difficulties continued. At the end of June, the company had total liquidity of $680 million and long-term debt of $2.91 billion. In the most recent quarter, the second quarter of this year, the company’s sales grew only 3.6% year-over-year, while in the US, which accounts for 41% of sales, it declined 4%.
The New York Stock Exchange (NYSE), where WeWork is listed, starts delisting procedures after notifying the company of violation안전놀이터 of standards if the company’s stock price trades at less than $1 per share for 30 trading days . WeWork’s share price began to fall below $1 in mid-March of this year. Its current market cap is $260 million.
If a company wants to avoid being delisted, it must present countermeasures to raise its stock price, such as on the exchange. A representative method is a ‘stock merger’ (reverse split) that reduces the number of shares in circulation.
However, WeWork has filed for delisting with the SEC. In order for a company to break through the immediate bankruptcy crisis, it must find a way to raise capital through debt or stock issuance, limit capital expenditures, and raise profits. Bloomberg News reported on the 24th that the company recently signed a large-scale debt reduction contract with some creditors, but it has started to recruit outside experts for restructuring again because liquidity and profitability are not easy to improve.
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