WeWork Will Close About 40 Locations As Losses Narrow

WeWork said Thursday that it was going to close roughly 40 "underperforming" locations in the United States and tempered its revenue forecast for the year, highlighting the challenges the co-working company still faces after its near collapse and subsequent bailout in 2019. The New York Times reports: For the third quarter, WeWork said it lost $568 million, an improvement from the same period last year, when it lost $802 million. Revenue of $817 million in the latest quarter was more than 20 percent higher than the $661 million reported a year earlier. WeWork does not own its buildings but leases office space and parcels it out to its customers, which include individuals, small businesses and larger companies. Memberships rose in the third quarter. But occupancy was only slightly higher in WeWork's 647 consolidated locations around the world, rising to 71 percent in the third quarter from 70 percent in the second. The company said it expected revenue of $3.35 billion to $3.37 billion this year. The upper end of that forecast is lower than the forecast it issued last quarter, when WeWork projected up to $3.5 billion in 2022 revenue. One factor leading to the pared back forecast, the company said, was "slower than expected growth" in its operations in the United States, Canada and Japan. WeWork said closing the locations was likely to reduce revenue but would benefit the company by cutting costs. The company has lost more than $12 billion since the end of 2018. Demand for office space has plummeted since companies started letting employees work from home during the pandemic. But WeWork considers this trend an opportunity. Because it offers space for shorter periods than traditional landlords, the company has claimed that it provides businesses more flexibility. "The headwinds in the office sector are really benefiting the flex model," Sandeep Mathrani, WeWork's chief executive, said Thursday on a call to discuss third-quarter results. Still, large companies' share of memberships has fallen, to 47 percent in the third quarter from 49 percent a year earlier. The enormous costs of WeWork's office leases and the expenses involved in running the locations have led many investors to express skepticism about WeWork's turnaround plan. The company's stock has lost more than three-quarters of its value since WeWork went public last year, giving it a market capitalization of $1.9 billion, a small fraction of the $47 billion value that private investors placed on the company in 2019.

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