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WeWork’s Business Still Growing Fast, Shows Market Data

WeWork’s Business Still Growing Fast, Shows Market Data
A recent market study published by CBRE has found that the United States based global office space sharing company WeWork is still doing well with respect to its core business despite the company failing to launch a much hyped initial public offering earlier this year and the ouster of its co-founder and CEO and its ultimate takeover by Japan’s investment form Softbank.
More than 69 per cent of the flex leasing market in the United States is currently under the control of WeWork, the report noted.
The company with its business interests and office spaces spread all across the world has gained prominence in recent months after the name WeWork shot into eminence following a spate of controversies surrounding it. Its IPO had to be scuttled at the last moment because of limited investor interest in it after the company’s valuation dropped to below $8 billion from about $40 billion in January this year. Investors were also worried about the business model of the company and absence of a clear path towards profitability.
The management of the company under its CEO and co-founder was also criticized. The cash reserves of the company ran into critical position according to reports with only a few months worth of cash at hand left till September this year even while the company continued to burn cash through its business operations.
Its plan to launch an IPO was also reportedly opposed by WeWork’s largest shareholder Japan’s SoftBank because of the sharp drop in the valuation of the company. When SoftBank had last led an investment round in January this year, WeWork was reportedly valued at about $40 billion which dropped significantly within a few months. After SoftBank reported first loss in years last quarter, it was reported that the company was not at all happy with the performance of WeWork, which is still yet to post a profitable quarter. SoftBank was forced to write down a massive $8.9 billion majorly because of the poor performance of WeWork and Uber, which is also another startup with heavy investments form the Japanese firm.
The new report however claims that despite the ouster of its CEO, the acquisition of the company by SoftBanka and the threat of loss of thousands of jobs because of cost curtailment pressures, the company has marking growth in its revenues. There was a 15 per cent increase in leased square footage of the company for the last quarter compared to the previous quarter according to the CBRE report. We Work also controls about two-thirds of the 4 million sq. ft. leased office space market in the US.
These figures show that all is not lost for WeWork even with its myriad of problems.  The first mover’s advantage in the US market is clear as it now has control over almost 70 per cent of the American market. However analysts also fear that the total size of the American market and indeed the global market is not enough for the ambitions of the company.  

Christopher J. Mitchell

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