WeWork Stock Trading Halted Amid Bankruptcy Rumors
By Abigail Nehring November 6, 2023 6:15 pm
reprints![A WeWork location in Washington DC.](https://commercialobserver.com/wp-content/uploads/sites/3/2020/02/20171011-wework-apollo-exteriors-1.jpg?quality=80&w=755)
Trading of WeWork (WE) shares was halted before the opening bell on Monday, fueling the rumor mill about the company’s imminent bankruptcy, with the New York Stock Exchange website simply saying “news pending.”
Before the close on Friday, WeWork was trading at 84 cents a share. The stock has plunged into junk stock territory after opening at $11 a share two years ago.
The foundering coworking giant is likely to file for Chapter 11 bankruptcy in New Jersey as early as this week, the Wall Street Journal reported, citing sources with insider knowledge.
“Trading is halted for regulatory reasons when there’s significant news that’s going to come out, or there’s an imbalance between buyers and sellers,” said Adam Stein-Sapir, a bankruptcy expert at Pioneer Funding Group.
A spokesperson for WeWork did not respond to a request for comment.
A bankruptcy filing would certainly qualify as a major news event, Stein-Sapir said. Publicly traded companies do not have the power to halt trading on their own, but they have disclosure requirements with regulatory bodies that do, like the Financial Regulatory Industry Authority, which is authorized by Congress to safeguard the stock exchange, according to Stein-Sapir.
“This is why most companies report earnings after the bell,” Stein-Sapir said. “So that they don’t have to hold their stock because they’re announcing earnings in the middle of the day.”
WeWork’s first attempt to go public failed in 2019 after its initial public offering filing cast doubt on its business model and the staggering $47 billion valuation it received from SoftBank (SFTBY), one of WeWork’s largest direct investors. It finally went public through a special purpose acquisition company in 2021. At that time, the pandemic’s toll on the office market was just coming into focus, and WeWork’s troubles were far from over.
WeWork reported 72 percent occupancy in coworking locations it owns or leases in its second-quarter earnings results in August. It also posted $397 million in net losses and a 1 percent decrease in membership year-over-year, leading the company to tell investors it has “substantial doubt” about its ability to stay afloat.
Further evidence that WeWork was on the brink of running out of cash came this fall when it threw up its hands to lenders and skipped on $95.2 million in interest payments, later winning a 30-day grace period as it hoped to renegotiate its terms.
Abigail Nehring can be reached at anehring@commercialobserver.com.