To The Moon

$WeWork(WE)$ fell 20% following the company's announcement expressing concerns about its ongoing operations. The co-working space provider issued this caution after the previous day's market close, citing an unexpectedly rapid rate of membership cancellations.

The warning issued on Tuesday underscores a remarkable downfall for a company that was once regarded as one of the world's most valuable startups.

Over the past year, WeWork's stock price has declined by over 95%, currently trading at just $0.2 per share, with a market cap of only slightly over $400 million. This is a stark contrast to SoftBank's previous valuation of WeWork at $47 billion during its acquisition.

WeWork's Efforts to Address Challenges Failed

Management previously noted that due to oversupply in commercial real estate and the impact of overall economic fluctuations, there has been a "sharp decline" in membership numbers.

However, earlier this year, the company had entered agreements to reduce approximately $1.5 billion in debt and extend the maturity dates of some of its debts. WeWork believed that these measures would help preserve cash and sustain its operations.

Nevertheless, WeWork's problems continued to worsen. Additionally, WeWork stated that it is in search of four new board members, as three members had resigned previously.

On the other hand, WeWork's adjusted EBITDA loss for the second quarter reached $36 million, falling short of analyst estimates. 

Will WeWork Manage to Gain Liquidity?

In response to this challenge, WeWork has outlined measures to enhance liquidity and profitability, including cost reduction through restructuring and renegotiating favorable lease terms, boosting revenue by minimizing member attrition and generating new sales, as well as exercising expenditure control.

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The company stated that it plans to raise additional funds through issuing bonds, issuing more shares, or selling assets.