WeWork prepares to sack thousands of workers
Office-sharing start-up seeks greater financial stability after catastrophic year
WeWork former chief of staff accuses CEO of ‘offensive sexual conductWeWork, the real estate start-up that provides shared workspaces to start-ups and small businesses, is set to lay off thousands of workers as it tries to gain greater financial stability.
The company is reportedly preparing to sack between 4,000 and 6,000 employees. Around 2,000 of these work at its main office space renting business, with a further 1,000 at non-core businesses such as private schools. The embattled “unicorn” is also set to transfer 1,000 building maintenance employees from full-time to external contractors.
WeWork was planning an initial public offering (IPO) at the end of this year, with an initial valuation of about $47bn (£36bn, €42bn). Investor sentiment was not positive, however, with concerns raised over its path to profit and significant current losses. Founder and CEO Adam Neumann’s corporate governance style also put off investors.
WeWork cut its valuation to $20bn (£15bn, €18bn) and then to $12bn (£9.2bn, €10.8bn), but Softbank, its largest external shareholder, urged that the IPO be shelved, forced Neumann’s resignation and announced a $5bn (£3.8bn, €4.5bn) rescue package, taking an 80 per cent stake in October. Without the deal, WeWork would have run out of cash by the end of October, CNBC has reported.
Last week, WeWork told investors its losses had increased by 150 per cent in the third quarter of 2019, compared with the same period last year, with losses of $1.25bn on revenue of $934m.
This month, an unnamed WeWork shareholder began legal proceedings over the near-$1.7bn (£1.3bn) leaving package approved for Neumann.
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