We are on the brink of bankruptcy. The company’s shares are valued at 13 cents

Shares of WeWork fell sharply on Wednesday after the once-beloved startup warned it could go bankrupt.

WeWork has gone through major turmoil since 2019. It then attempted to go public for the first time, but many investors walked away due to its huge losses, corporate governance failures, and the management style of founder and then-CEO Adam Neumann.

According to Reuters, WeWork’s problems have continued unabated in the years since. The company was able to go public in 2021 after a significant drop in valuation, but it did not turn a profit. The agency points out that its “main sponsor”, the Japanese financial conglomerate SoftBank, sank tens of billions in an attempt to support the startup, but failed and the company continues to lose money.

“WeWork is probably the most overrated startup in recent years,” said Steve Clayton, head of venture capital at Hargreaves Lansdown.

Since debuting in October 2021, WeWork shares have lost nearly all of their value and were trading at 13 cents on Wednesday, valuing the company at $260 million. Several directors left, including CEO Sandeep Mathrani in May and three board members this week. The company said on Tuesday that it is looking for a new CEO.

The company’s business model assumes the conclusion of long-term lease contracts and short-term lease of space. It has grown rapidly over the years, but the COVID-19 pandemic has made shared office spaces less attractive.

Interim CEO David Tooley said during a call with analysts Wednesday that fewer and fewer companies, from large mature companies to start-ups, are willing to enter into long-term office leases.

Reuters notes that the company’s current woes are a blow to SoftBank, which has backed it with billions of dollars in recent years. Company president Masayoshi Son personally backed Newman and bought WeWork in 2019 for $10 billion after a failed initial public offering.

SoftBank suffered billions of dollars in losses investing in WeWork. The CEO of a Japanese bank lamented his support of the company, saying that “his rating was poor in many ways and it deeply reflects on him.”

In March, WeWork reached an agreement to reduce debt by about $1.5 billion and extend some maturities to provide liquidity. The cost reductions helped WeWork post a lower net loss of $349 million. In the second quarter of $ 577 million. a year ago, but the loss is still close to $650 million. cash in the first six months of the year. At the end of June, the company had $205 million.

“Flexible workspaces have a future in the office ecosystem, but WeWork in its current state may not,” BTIG analysts wrote Wednesday, downgrading the stock to “neutral.”

WeWork said it plans to increase liquidity by lowering rent and rental costs, controlling expenses and reducing customer stress.