WeWork’s filing for bankruptcy has sparked speculation about whether the flexible workspace provider can make a comeback. It was once valued at an impressive US$47 billion, only to suffer a dramatic fall in 2019 after its failed IPO. Nevertheless, the company has been striving to start anew, and the bankruptcy proceedings might enable it to terminate leases and exchange its liabilities for equity, thereby improving its balance sheet. But is this enough for WeWork to become profitable?
The company has already reduced its size since co-founder Adam Neumann left, and it needs to make further cuts. WeWork’s bankruptcy is a major setback for the already troubled urban office market, and if workers remain wary of offices, the situation could get worse. Nevertheless, there is still a requirement for hybrid working, and rival IWG has recorded an increase in income and a decrease in net debt.
IWG has some advantages over WeWork, including more suburban locations and franchising and partnership deals. Its market capitalisation of £1.4 billion (US$1.7 billion) is also much less than WeWork’s. Although launching a company like WeWork today would be unlikely, the emergence of hybrid working implies that WeWork still has the potential to triumph after bankruptcy.