WeWork plunged to the precipice of bankruptcy Wednesday after warning “substantial doubt exists” about its survival — escalating the threat to New York City’s hurting commercial real estate market.
The pioneering co-working company, founded by eccentric Israeli-born entrepreneur Adam Neumann, closed the day at 13 cents — after being valued at $47 billion just four years ago.
The stock has nose-dived more than 95% since the company went public in 2021, dropping Its market cap to $274 million.
WeWork’s death spiral figures to cause added pain to landlords struggling to fill office buildings and banks feeling the sting of Moody’s downgrade of more than two dozen lenders Tuesday.
The New York-listed company rents 6.8 million square feet across more than 70 locations in Manhattan, according to Bloomberg. That’s nearly enough to fill the 3.5 million square-foot One World Trade Center — the tallest building in the Western hemisphere — twice
There’s roughly $7.5 billion of commercial-mortgage backed securities potentially exposed to WeWork, with about 38% in the city, according to a note by analysts at Barclays cited by Bloomberg.
“Given the current weak fundamentals of the office market in New York, we believe these locations might be at particular risk of closure due to overconcentration,” Barclays analysts Lea Overby and Anuj Jain wrote.
Interim CEO David Tolley set off alarm bells Tuesday after announcing the company posted a net loss of $397 million in the second quarter.
“As a result of our losses… substantial doubt exists about the company’s ability to continue as a going concern,” he told analysts on conference call.
Tolley — who took over in May after Sandeep Mathrani’s unexpected exit — blamed WeWork’s woes on “excess supply in commercial real estate, increasing competition and macroeconomic volatility.”
The company warned its future depends “upon successful execution of management’s intended plan over the next 12 months.”
The dire outlook led the company to reshuffle its board after the resignation of three directors who disagreed with its governance and strategy, replacing them with corporate bankruptcy experts, the Wall Street Journal reported.
Representatives for WeWork didn’t immediately respond to The Post’s request for comment.
It is a dramatic collapse for a company that saw its value skyrocket to $47 billion from $17 billion in 2019 — the year before the pandemic emptied office buildings and sparked the work-from-home phenomenon — when Japanese conglomerate SoftBank’s invested in Neumann’s brain-child with plans to take it public.
At the time, WeWork operated 850 locations across 30-plus countries.
However, it all came crashing down by September of that year when investors criticized Neumann for selling nearly 30% of the company’s equity to SoftBank and its associated funds for an unrealistic price.
The IPO failed and cost Neumann his job, though he pocketed $455 million and other financial benefits as part of his deal with SoftBank to walk away. He maintains a 10% stake in the company and has a net worth of more than $2.2 billion, according to Forbes.
It was also revealed that Neumann ran a shoddy ship, which allegedly included drugs, alcohol and parties as a big part of the work culture in the book “Billion Dollar Loser” about the mogul.
His stupendous rise and ultimate ouster was turned into a miniseries last year called “WeCrashed.”