WeWork is likely to report losses of $1.5bn (£1.1bn) this year as the flexible working giant gears up for a $9bn float.
The company is scheduled to make its long-awaited debut on the New York Stock Exchange on or around 21 October via a merger with BowX, a special-purpose acquisition company. But the projected losses, disclosed last week in an investor presentation, have cast a shadow over the listing.
After losing about $5bn over the past three years, WeWork boss Sandeep Mathrani is seeking to convince investors that the company is primed for recovery. Occupancy at its 762 global sites — which slumped to 47% during the pandemic — rallied to 61% in the three months to September.
The company said its 60-plus sites in London accounted for more than 35% of all leasing activity in the capital in the second quarter.
WeWork’s financial performance has been dented this year not only by the pandemic, but the $793m of costs arising from closing sites and its settlement with co-founder Adam Neumann. Mathrani has said that the downsizing of the firm was largely complete, after pulling out of more than 150 sites. But one landlord to the group said he expected WeWork to leave more buildings because it had committed to leases that would prove unaffordable.
The merger with BowX, a SPAC established by technology entrepreneur and Sacramento Kings basketball team owner Vivek Ranadivé, will provide WeWork with about $1.3bn of cash. The company’s debts total $4.58bn. WeWork forecasts that its underlying earnings will recover to $243m next year, before rising to almost $2bn in 2024. The company projects that sales will almost triple from $2.66bn this year to $6.79bn.
