Previously Startup IDR 731.6 Trillion, This is the Reason WeWork Went Bankrupt Tech – 4 hours ago

Jakarta, CNBC Indonesia – WeWork is officially bankrupt. This co-working space company was valued by investors at US$ 47 billion (Rp. 731.6 trillion).

Reuters stated that WeWork management filed for bankruptcy on Monday local time. The company reported assets and liabilities, respectively, ranging between US$ 10 billion and US$ 50 billion.

“WeWork could use bankruptcy to remove the burden of rental obligations,” lawyers from the law firm Cadwalader, Wickersham & Taft LLP were quoted as saying Reuters.

WeWork struggled to make a profit because the company was burdened by high building rental costs. On the other hand, many WeWork customers, namely co-working space rental companies, are canceling contracts because their workers work from home.

Revenue from rentals contributed to 74 percent of WeWork’s revenue in the second quarter of 2023.

WeWork has been pushing hard to renegotiate leases with building owners. At least 590 rental contracts were successfully changed so that the company could save US$ 12.7 billion. However, these savings could not cover WeWork’s falling revenue.

WeWork’s revenue fell sharply because most of its customers are startups and MSMEs. Unlike corporations and conglomerates, their operational costs are more susceptible to being affected by inflation and economic slowdown

The situation got worse because the building owners turned to become WeWork’s new rivals. The quiet property market means building owners are also offering short-term rentals such as WeWork.

When led by Adam Newumann, WeWork managed to grow into a startup with the highest valuation in the US. Investments from big investors such as SoftBank and giant bank JPMorgan Chase brought its valuation to US$ 47 billion.

SoftBank, an investor that also holds shares in technology giants such as Uber and large Southeast Asian technology companies such as GoTo and Grab, owns 60 percent of WeWork shares.

In fact, SoftBank still dared to disburse funds to encourage WeWork to become a public company when Neumann’s management style and financial reporting were revealed to the public.

The shambles in financial conditions forced WeWork to cancel the IPO process in 2019. SoftBank then brought WeWork into a public company through a merger with a SPAC at a valuation of US$ 8 billion.

[Gambas:Video CNBC]

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