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From 'Mission Impossible' To Profitability In 2021, WeWork Chairman Shares Positive Results Despite Pandemic

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From 'Mission Impossible' To Profitability In 2021, WeWork Chairman Shares Positive Results Despite Pandemic

The chairman of WeWork, Marcelo Claure, said that the co-working space company was on the verge of being profitable in 2021 after carrying out extensive cost-cutting measures.

What Happened

In an interview with the Financial Times on Sunday, Claure disclosed that after the company laid off 8,000 employees, renegotiated leases, and sold some of its assets, it has been on the path to profit and positive cash flow, a year ahead of schedule, in 2021.

Claure said, “Everybody thought WeWork was mission impossible. [That the company had] zero chance. And now, a year from now, you are going to see WeWork to basically be a profitable venture with an incredible diversity of assets.”

The ongoing COVID-19 pandemic led to a demand in office space from businesses looking to spread their workers in satellite offices despite a prevailing trend of work-from-home, revealed Claure.

Companies that have signed new lease agreements with WeWork in June include Mastercard Inc, (NYSE: MAMicrosoft Corporation, (NASDAQ: MSFT) Citigroup, (NYSE: C), and ByteDance, the owner of TikTok.

June was the strongest sales month for WeWork since February.

Why It Matters

According to FT, WeWork has spent $482 million in cash during the first three months of 2020, while cash on hand had dwindled to less than $4 billion.

SoftBank Group Corp (OTC: SFTBY) offered billions of dollars as a rescue package to the office-space company. It also included a $3 billion share buyback, which never materialized. 

Claure took over as chairman in October after WeWork’s co-founder Adam Neumann was ousted, noted FT.

WeWork also hired Sandeep Mathrani in 2020, a property veteran, who is carrying out an extensive restructuring that includes cutting thousands of jobs.

WeWork has shed non-core businesses such as the Flatiron School, software firm Teem, and its stake in The Wing, a co-working startup in its efforts to trim down.

 

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