Coworking and flexible workspace provider WeWork (NYSE:WE) is facing a financial crisis. Hefty losses and liquidity concerns have made it tough for the company to operate, and it is nearing bankruptcy. The company could soon file a Chapter 11 petition in New Jersey, a Wall Street Journal report highlighted. Following this development, WeWork stock fell over 42% in Tuesday’s after-market trading hours.
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Given the challenges, WeWork announced on October 2 that it missed its scheduled interest payments to bondholders, triggering a 30-day grace period in which it must fulfill these obligations. If the payments aren’t made within this timeframe, it will be classified as an “event of default.”
Later on October 31, WeWork said it successfully negotiated with the bondholders, securing an extra seven days to engage in discussions with stakeholders before the formal declaration of a default.
As the company is struggling to remain afloat, let’s look at how much money it lost in the recent past.
Is WeWork Out of Cash?
WeWork incurred net losses of $2.3 billion, $4.6 billion, and $3.8 billion in 2022, 2021, and 2020, respectively. Further, it delivered a net loss of $0.7 billion in the first six months of 2023. It generated negative cash flow from operating activities during the same period. As per its balance sheet, WeWork had cash and cash equivalents of $205 million and long-term debt of $2.91 billion as of June 30, 2023.
The company blamed higher member churn, weaker demand, and the challenging macroeconomic environment behind its underperformance and losses. Additionally, WeWork’s management expressed concerns about the company’s ability to continue operating due to escalating losses and growing cash requirements.
With this backdrop, let’s look at what the Street recommends for WeWork stock.
WeWork: Analysts’ Recommendation
WeWork stock has dropped about 96% year-to-date and is heading towards bankruptcy. Nonetheless, it still has two Hold recommendations from Wall Street analysts. On October 23, UBS analyst Alex Kramm lowered the stock’s price target to $2.5 from $8.
The fact that the stock has dropped massively suggests significant concerns about the company’s future prospects. While analysts’ recommendations and price targets should be considered one of many factors when considering an investment, investors must be cautious about WeWork stock as it could remain highly volatile.
