WeWork aims to comply with listing rules through 1-for-40 reverse stock split.
WeWork to Proceed with Reverse Stock Split
By Shivansh Tiwary and Kannaki Deka
WeWork announced on Friday that it will proceed with a one-for-forty reverse stock split in order to regain compliance with listing requirements. This comes just days after the flexible workspace provider raised “substantial doubt” over its ability to continue operations.
The company’s shares have lost nearly all of their value since making their market debut through a blank-check merger in October 2021. They were last down 23.6% at 12 cents on Friday.
WeWork, once privately valued at $47 billion, now has a market capitalization of about $336 million, marking a stunning reversal of fortune.
The SoftBank-backed company has faced turmoil since its failed attempt to go public in 2019. Investors grew concerned about its hefty losses and began to doubt its business model of taking long-term leases and renting them for the short term.
WeWork reported a 3% drop in total physical memberships from a year earlier, citing increasing competition, macroeconomic volatility, and softer demand than anticipated.
Meanwhile, the company has taken several steps to save cash, including exiting locations, cutting jobs, and reducing debt by about $1.5 billion.
In May, CEO Sandeep Mathrani resigned, followed by the exit of CFO Andre Fernandez.
WeWork received a non-compliance notice from the New York Stock Exchange in April and had six months to regain compliance.
The reverse stock split, which consolidates the number of existing shares into fewer shares, will help the company regain compliance with the minimum closing price required for continued listing.
“It could suggest that they are still figuring out or exploring ways to raise more capital,” said Mizuho Securities analyst Vikram Malhotra.
The reverse stock split, authorized by shareholders in June, will be effective at market close on Sept. 1, according to the company.
(Reporting by Shivansh Tiwary and Kannaki Deka in Bengaluru, additional reporting by Pratyush Thakur; Editing by Krishna Chandra Eluri and Sriraj Kalluvila)
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