WeWork Will Close About 40 Locations As Losses Narrow (nytimes.com) 43
WeWork said Thursday that it was going to close roughly 40 "underperforming" locations in the United States and tempered its revenue forecast for the year, highlighting the challenges the co-working company still faces after its near collapse and subsequent bailout in 2019. The New York Times reports: For the third quarter, WeWork said it lost $568 million, an improvement from the same period last year, when it lost $802 million. Revenue of $817 million in the latest quarter was more than 20 percent higher than the $661 million reported a year earlier. WeWork does not own its buildings but leases office space and parcels it out to its customers, which include individuals, small businesses and larger companies. Memberships rose in the third quarter. But occupancy was only slightly higher in WeWork's 647 consolidated locations around the world, rising to 71 percent in the third quarter from 70 percent in the second.
The company said it expected revenue of $3.35 billion to $3.37 billion this year. The upper end of that forecast is lower than the forecast it issued last quarter, when WeWork projected up to $3.5 billion in 2022 revenue. One factor leading to the pared back forecast, the company said, was "slower than expected growth" in its operations in the United States, Canada and Japan. WeWork said closing the locations was likely to reduce revenue but would benefit the company by cutting costs. The company has lost more than $12 billion since the end of 2018.
Demand for office space has plummeted since companies started letting employees work from home during the pandemic. But WeWork considers this trend an opportunity. Because it offers space for shorter periods than traditional landlords, the company has claimed that it provides businesses more flexibility. "The headwinds in the office sector are really benefiting the flex model," Sandeep Mathrani, WeWork's chief executive, said Thursday on a call to discuss third-quarter results. Still, large companies' share of memberships has fallen, to 47 percent in the third quarter from 49 percent a year earlier. The enormous costs of WeWork's office leases and the expenses involved in running the locations have led many investors to express skepticism about WeWork's turnaround plan. The company's stock has lost more than three-quarters of its value since WeWork went public last year, giving it a market capitalization of $1.9 billion, a small fraction of the $47 billion value that private investors placed on the company in 2019.
The company said it expected revenue of $3.35 billion to $3.37 billion this year. The upper end of that forecast is lower than the forecast it issued last quarter, when WeWork projected up to $3.5 billion in 2022 revenue. One factor leading to the pared back forecast, the company said, was "slower than expected growth" in its operations in the United States, Canada and Japan. WeWork said closing the locations was likely to reduce revenue but would benefit the company by cutting costs. The company has lost more than $12 billion since the end of 2018.
Demand for office space has plummeted since companies started letting employees work from home during the pandemic. But WeWork considers this trend an opportunity. Because it offers space for shorter periods than traditional landlords, the company has claimed that it provides businesses more flexibility. "The headwinds in the office sector are really benefiting the flex model," Sandeep Mathrani, WeWork's chief executive, said Thursday on a call to discuss third-quarter results. Still, large companies' share of memberships has fallen, to 47 percent in the third quarter from 49 percent a year earlier. The enormous costs of WeWork's office leases and the expenses involved in running the locations have led many investors to express skepticism about WeWork's turnaround plan. The company's stock has lost more than three-quarters of its value since WeWork went public last year, giving it a market capitalization of $1.9 billion, a small fraction of the $47 billion value that private investors placed on the company in 2019.
600 million loss per quarter (Score:3)
Re: (Score:3)
I could even save them 500 millions a quarter. Just close shop and take 100 millions a quarter, which is fair, IMO, since I save them half a billion at the same time..
Re: (Score:1)
Mailing votes happens every year. This year, it just stopped applying to the millionaire class only.
Cut Out The Middleman? (Score:5, Interesting)
WeWork does not own its buildings but leases office space and parcels it out to its customers
This makes no sense. If I need office space, why can't I just lease it from the building owner? Why do I need WeWorK?
WeWork is a pointless middleman. I guess that's why they aren't making any money.
Re:Cut Out The Middleman? (Score:4, Informative)
Wework's problem is that their business model is easy to copy and the competitor he uses now charges him less than a third of what Wework charges.
I'm pretty sure the Wework he did use has now closed down.
Re: (Score:2)
Re:Cut Out The Middleman? (Score:5, Informative)
This makes no sense. If I need office space, why can't I just lease it from the building owner? Why do I need WeWorK?
It sounds like you've never rented office space before. The space is useless until you build it out to make it an office. WeWork does that for you.
Re:Cut Out The Middleman? (Score:4, Interesting)
Not only that but we work can rent by the week/month business office space rents are generally contracted in multi year agreements. 3,5, 10 years. Are all common.
Can you rent an apartment for 5 years and if you want to kove out early have to oay if they cant re rent it?
Re: (Score:2, Interesting)
The space is useless until you build it out to make it an office.
OK ... People were doing that for 100+ years before WeWork existed.
WeWork is a pointless company trying to make money by inserting itself as a middleman. Their failure demonstrates:
(a) They aren't needed
(b) They are incompetent
or
(c) All of the above.
Re: Cut Out The Middleman? (Score:3)
No, it proves they grew too fast and spent money wildly.
Why must a business be "new" to justify its existence? "What, you built an Italian restaurant? People have done that for centuries, you have no reason to exist, you just opened this restaurant to make money!"
Re: (Score:2)
Its hilarious that you chose for your example one of the least profitable and most likely to go out of business things you could do.
Re: Cut Out The Middleman? (Score:2)
Odd, my city is littered with 30-40 year-old Italian restaurants, isn't yours?
Re: (Score:2)
You mean Olive Garden?
Re: (Score:2)
It sounds like you've never rented office space before. The space is useless until you build it out to make it an office. WeWork does that for you.
Unless the space was already an office when the last person was leasing it, in which case all it needs is paint and furniture. And it's not like building a space out into an office is a big deal, especially with modern open-plan offices. There are hardly any doors, it's mostly sheet rock and network drops.
Re: (Score:2)
and phones, and internet, and intranet, and power wiring, and cabling, and copier, and a printer, and a break room, and a conference room, and a dozen other things depending on how many workers and what they're doing.
Re: (Score:2)
In the Wework locations I've been in, the walls are made of glass. There's no privacy and it's very loud in there due to no drop ceilings and wooden floors.
Re:Cut Out The Middleman? (Score:5, Interesting)
WeWork is for the information gig worker who can't seem to figure out how to work from home.
Instead of a coffee shop, they go to wework.
They get the illusion of going to work
Re:Cut Out The Middleman? (Score:4, Insightful)
Plenty of people live in quite small apartments, where there are not spare rooms for working. If you live in a one bed apartment or a studio, shared with your partner, it's not going to be practical for both of you to work from home. Especially if one is, say, software designer, and the other a guitarist, or worse, a chatty sales person.
Re: (Score:2)
Yet another example.
Wasn't saying the examples I made were the only ones.
Re: (Score:1)
Especially if one is, say, software designer, and the other a guitarist, or worse, a chatty sales person.
So it would be like working in an open floor plan office, what's your point?
Re: (Score:3)
That is a pretty bad analogy. I have a few friends that use WeWork; it gives them a real office environment which is important to them, and it is close to home and flexible. One has been doing it for at least 4 years. Their reasons include work/life separation boundaries, having a quiet space, thriving on being around other people, and home is too small. It is also easier to deduct the cost on taxes, and gives them some level of flexibility when they travel.
A coffee shop is fine if you aren't impacted b
Re: (Score:2)
WeWork is for poor people who can't afford to work at home, e.g. because their tiny 1 bedroom apartment doesn't have space or there are too many distractions.
Turns out a lot of people who don't think they are poor actually are.
Re:Cut Out The Middleman? (Score:5, Informative)
WeWork does not own its buildings but leases office space and parcels it out to its customers
This makes no sense. If I need office space, why can't I just lease it from the building owner? Why do I need WeWorK?
WeWork is a pointless middleman. I guess that's why they aren't making any money.
If you're a smaller company, particularly a startup, co-working can be a good setup. You don't have the commitment of a lease, you don't need to find a bunch of desks and other office furniture, it's a bit more social if you're small enough, and it can be cheaper especially if you're only using it occasionally.
Of course, I'm not sure how big the co-working market really is, and when looking for co-working I want something with a smaller brand and culture (I'm interested in my company, not WeWork) so that might have something to do with their difficulties.
Re: (Score:1)
Of course, I'm not sure how big the co-working market really is
Location, location, location. There are some locations (the poster child is Silicon Valley/San Francisco/Oakland) where there are a sufficient number of startups that want/need a place to begin that co-working spaces (called "low commitment offices") are common and well used. That does not mean WeWork (and other co-working spaces) did not over-expand during the boom years, and need to shrink to locations that still have sufficient utilization.
Re: Cut Out The Middleman? (Score:3)
WeWork offers much more than 'raw space' from a building's owners - but you knew that right?
WeWork takes in fractional-year tenants, the space rented is a tiny portion of the building (down to a desktop), and they provide professional services and organize events.
I get the impression you had never heard of WeWork before this posting, and formed an opinion based on your (incorrect) assumption that WeWprk simply takes a cut off leases - that's what realtors do...)
Re: (Score:2)
The main thing WeWork used to do was lease real estate from their CEO thus making him fuckoff rich.
Re: (Score:2)
WeWork offers much more than 'raw space' from a building's owners - but you knew that right?
I get the impression you haven't worked in a WeWork office. Unfinished pillars, no drop ceiling, reclaimed wood floors, undermaintained kitchen and restrooms. It's actual rather close to being a raw office.
Re: (Score:2)
This makes no sense. If I need office space, why can't I just lease it from the building owner? Why do I need WeWorK?
Do you need it for a year? Some places require a year lease as a minimum.
You could say the same for AirBNB... Why the middle man? Just call up random people and ask if you can rent a room/house for 24-72 hours.....
By all means, continue to flap your gums and show us how narrow-sighted you are and how you are incapable of thinking outside of the box....
Re: (Score:2)
Building owners would generally only deal with full size empty offices, with multi year lease terms.
There are plenty of people who don't need a full office and maybe just a desk or two, don't need exclusive use (eg maybe only a couple of days a week), don't need it for very long, or you might need different locations at different times etc.
The idea of WeWork is that it provided a level of flexibility that traditional building owners did not, as well as a central place to book through, and providing space wi
What? (Score:1)
How in the hell is WeWork even still in business?
Re: What? (Score:3)
Investors keep pumping money into it, plain and simple.
Re: What? (Score:2)
The company's stock has lost more than three-quarters of its value since WeWork went public last year, giving it a market capitalization of $1.9 billion, a small fraction of the $47 billion value that private investors placed on the company in 2019.
Investors poured $47BN into a company now not even worth $2BN... that's amazing.
WeWorkNoLonger (Score:1)
nuf sed
Changing their name to... (Score:2)
Twitter Buying WeWork (Score:2)
Re: (Score:1)
Now that Musk owns Twitter, they should maybe also buy out some AirBNBs so he has a place to take the female employees he intends to impregnate.
Re:Twitter Buying WeWork (Score:4, Insightful)
Well, Musk already said that there's a nonzero chance that Twitter would fail, and this would certainly help it along. The first thing that happens when you force people back into office in this economy is that everyone who has at least half a skill and thus a good chance to get hired somewhere else will bail and all you have left is the dregs that can't bail because they can't find something else, due to a lack of skill.
Rent a month-to-month office via Craigslist (Score:2, Informative)
Given the shrinkage of the company... (Score:2)
WeWork could work (Score:2)