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WeWork cuts staff to stay afloat

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WeWork cuts staff to stay afloat
November 22
09:00 2019

We have already written several times about the difficulties WeWork startup faces. We recall that the company develops co-working around the world. The scheme is this: the company rents premises, reconstructs, divides them to offices and leases to other companies for a short period of time.

A few months ago, the company had to postpone the IPO due to the weak interest of investors in the initial public offering. Investors were primarily confused by the personality of the co-founder and CEO Adam Neumann, who became famous for his extravagant decisions.

Neumann was forced to leave his senior position after the cancellation of the initial public offering. Marcelo Claure was appointed as the new CEO. The first task of the head was to stop the growth of expenses after an unsuccessful IPO. The decision of the company to significantly reduce staff was quite expected and logical. Analysts have estimated that about 4,000 people may lose their jobs. At the moment, the company announces its intention to reduce the number of employees by about 2,400 ones. At first, they optimized foreign branches; this week, a wave of dismissal has hit the United States. By the way, the company employs 12,500 people.

Unfortunately, the solution was more than expected. For the third quarter, the company’s loss has risen to $ 1.25 billion. The increase in expenses has significantly outpaced the revenue growth. The cancellation of the IPO left the startup without funds.

A month ago, an American startup received financial assistance from the Japanese bank SoftBank. Eventually, the bank has got over 80% of the shares in the company.

 

The material was prepared with the participation of Katya Wilson,
a leading analyst of the brokerage company UFT Group

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