Office-sharing startup WeWork said it lost over $2 billion in the first quarter of 2021. The announcement comes as the company prepares for its stock market debut.
WeWork’s first attempt to go public was in 2019, but failed over concerns about its business model and the then CEO and co-founder Adam Neumann’s leadership style.
Since Neumann’s resignation in September, 2019, the company has gone through a major shakeup that has seen significant job cuts and businesses sold off.
WeWork, which is backed by Japanese tech giant SoftBank, reported a net loss of $2.06 billion on sales of $598 million in the first quarter of 2021. Occupancy rose to 50 percent, up slightly from the previous quarter, the company said in a press release on Thursday.
The company was heavily affected by Covid-19 pandemic as social distancing rules caused a surge in the number of people working from home. Concerns about infections also caused thousands of workers to avoid leasing shared office spaces.
But the firm said people are now returning to its offices as coronavirus restrictions are eased.
“WeWork continued to see encouraging signs of recovery with sales activity, a critical indicator of future revenue, ramping over the first quarter, as the company achieved gross desk sales of 24k in January, 25k in February, and 38k in March,” the company said.
WeWork is in the midst of a turnaround effort led by CEO Sandeep Mathrani, who was chosen by Softbank to replace Neumann. The bank has invested at least $18.5 billion in WeWork since 2017, largely at a much higher valuation than the company currently is believed to command.
The commercial real estate company said it spent $494 million on “restructuring costs” driven by Japanese tech giant SoftBank’s stock purchases, and a settlement with ousted CEO and co-founder Adam Neumann.
In March this year, the company said it would finally see its shares start trading on the stock market, through the purchase by the publicly traded BowX Acquisition Corp.
BowX is a so-called special purpose acquisition company, a shell firm that uses proceeds from a public listing to buy a private firm.
The firm is led by the owner of the NBA’s Sacramento Kings and affiliated with basketball legend Shaquille O’Neill.
The deal valued WeWork at $9bn – roughly a fifth of its estimated worth in 2019, before its earlier flotation effort spectacularly imploded.
Investors had raised questions about the company’s finances and how the business was being managed by founder Adam Neumann, who then left the firm.