A WeWork co-working office space in Berkeley, California, on Wednesday, Aug. 9, 2023.
David Paul Morris | Bloomberg | Getty Images
WeWork, the office-sharing company previously valued at $47 billion, announced on Friday that it will implement a 1-for-40 reverse stock split in an attempt to avoid delisting its stock.
Following the announcement, the shares dropped 11%, closing at 14 cents. The stock has been trading below $1 since late March, and WeWork’s market capitalization currently stands at approximately $300 million.
“The Reverse Stock Split is being effected to regain compliance with the $1.00 per share minimum closing price required to maintain continued listing on the New York Stock Exchange,” stated WeWork in a filing with the SEC.
The reverse split will come into effect after the close of trading on Sept. 1. While the move will not directly improve the company’s financials or valuation, it would increase the stock price to $5.60 based on Friday’s closing price. Failure to maintain a share price of $1 for 30 days can result in a delisting by the NYSE.
Regardless of the stock price, WeWork is facing significant challenges. Last week, the company expressed doubts about its ability to continue operations due to mounting losses and decreasing cash reserves.
In the first half of this year, WeWork reported a net loss of $700 million, following a $2.3 billion loss in 2022. As of June 30, it had $205 million in cash and equivalents and total liquidity of $680 million, along with $2.91 billion in long-term debt.
Over the past few years, WeWork has experienced one of the most remarkable corporate collapses in recent U.S. history. Once valued at $47 billion by Masayoshi Son’s SoftBank, the company attempted and failed to go public in 2019. The pandemic exacerbated its existing struggles as numerous companies terminated their leases abruptly, and the subsequent economic downturn led to even more client closures.
WeWork went public in 2021 through a special purpose acquisition company (SPAC). Since the end of 2021, the stock has lost 98% of its value.
WATCH: CNBC’s Andrew Ross Sorkin interviews WeWork founder Adam Neumann
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