WeWork Lost $3.2 Billion Last Year, Seeks SPAC Deal to Recover

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Last year, WeWork was forced to shut down many of its coworking spaces, leading to a devastating $3.2 billion loss, according to a report by Reuters citing a person familiar with the matter. The company is now looking to merge with a special purpose acquisition company and reportedly is in talks with BowX, the Financial Times reported.

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WeWork is an office-sharing company that first opened its doors in 2010. During the pandemic, WeWork’s coworking space occupancies plummeted from 72% to 47%, according to the Financial Times. The company was valued at approximately $47 billion in 2019 but is now seeking valuation of just $9 billion, according to Reuters.

Reuters first reported in January that WeWork was looking to go public by merging with a SPAC. Currently a trend on Wall Street, SPACs are shell companies established by investors to raise money through an initial public offering to acquire another company. The acquired company then becomes a public company by virtue of the acquisition.

SPACs are often sponsored by professional private equity or hedge fund investors, institutional investors or high-profile CEOs. BowX Acquisition Corp. is SPAC that happens to have Shaquille O’Neal onboard as an advisor, according to the Financial Times.

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WeWork’s first attempt to go public last October was shattered due to criticism over CEO Adam Neuman’s management style and the company’s business model, according to Reuters. The company was later bailed out by SoftBank Group.

WeWork’s current forecasts project 90% coworking occupancies by the end of 2022, according to the Financial Times. Adjusted earnings are projected at upwards of $485 million in 2022 before interest, taxes, depreciation and amortization.

In January, WeWork told Reuters, “Over the past year, WeWork has remained focused on executing our plans for achieving profitability. Our significant progress combined with the increased market demand for flexible space, shows positive signs for our business.”

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