WeWork's Future: Navigating Bankruptcy or Thriving?

With the ongoing pandemic and a shift towards remote working, WeWork is facing a challenging time. Many industry insiders and financial analysts are speculating that the company may soon file for bankruptcy. Is it a sinking ship, or could it weather the storm?

The Current State of WeWork

According to recent reports, WeWork's valuation has dropped significantly, being valued at just under 3 billion as of May. This comes as no surprise, considering the company's extensive expansion ahead of the pandemic, which left it with numerous underutilized properties.

The question of whether WeWork can survive in the remote working era is increasingly pertinent. Should the world move entirely to remote work, there would be no need for physical office spaces. This reality poses a significant threat to WeWork's business model.

The Economic Perspective

While some argue that WeWork may fare better if the economy booms, the outlook is grim during economic downturns. Secure long-term leases can be advantageous, but recessions and economic downturns can severely impact profitability. WeWork's current financial status is unstable, and the company may struggle even in a booming economy.

In an economic downturn, WeWork's business model could face significant challenges. The lease structure and the company's current weight may become crushing, leading to further losses. As the economy stabilizes, the company may need to reevaluate its business model and operations to ensure sustainability.

Prognosis and Possibilities

The future of WeWork remains uncertain. Nobody can predict the exact path the company will take, and it is not wise to invest at this time due to the abundance of other secure companies offering better investment opportunities. The answer to whether WeWork will survive is a definitive 'nobody knows.'

While the grand vision of WeWork as a comprehensive ecosystem including co-working, co-living, and co-schooling appears to be on the decline, a few select locations may still be profitable. Major city locations with low vacancy rates could potentially operate profitably, even without innovation from the parent company. The S-1 filing did not discuss profitability, but it is a key factor in the company's future viability.

The biggest uncertainties revolve around the internal legal structure of the company. Landlords are likely to sue as the We Company closes locations it cannot afford. A Chapter 11 bankruptcy filing is a probable outcome, possibly as early as 2020 or as late as 2022. If there are enough profitable locations available, a buyer could acquire them, leading to a smaller WeWork. However, rebranding post-bankruptcy may not be the best strategy, given the company's recent controversies.

Conclusion

WeWork's grand vision of changing the way we do business has already failed. The company's current form is unsustainable, and a bankruptcy filing is likely. While a distilled version of WeWork could potentially operate, it would need to rebrand and operate as a smaller entity. The future of WeWork largely depends on the legal and financial outcomes of its current situation.