WeWork Stock Price Outlook: What Is Next After The Bankruptcy?
WeWork stock price sat at its all-time low level when the stock’s trading was halted on the New York Stock Exchange. The office-sharing company filed for Chapter 11 bankruptcy at the start of this week, which will be limited to the USA and Canada. The move came after the accumulation of $18.65 billion in debt against assets of $15.06 billion.
The Softbank-backed office space-sharing company is all set to appear in its first bankruptcy court on Wednesday to address its financial challenges. It aims to cut over $4 billion in debt, mostly composed of rental costs, through a restructuring plan. This plan is designed to shrink the company’s presence in the real estate market.
The management of WeWork intends to convert the $4 billion debt into equity as a part of its restructuring plan with support from its key investors. Prior to filing for bankruptcy, the office space provider successfully renegotiated 590 leases, which resulted in savings of approximately $12.7 billion in future rent payments. The company aims to renegotiate 400 leases after filing for Chapter 11 bankruptcy.
Once valued at $47 billion, WeWork has seen its market value plummet by around 98% since its special acquisition merger with BowX. The failure of this company is mostly attributed to bad decision-making, overpriced leases, and the lingering economic effects of COVID-19.
WeWork Stock Price Outlook
The future of NYSE: WE hangs in the balance as it depends entirely on its negotiations with its creditors. If the loan terms are revised and the company improves its balance sheet, the stock price of the office-sharing company may rebound.
However, due to the significant drop in the share price to all-time lows, it may not be advisable to invest in WeWork stock price right now. I would recommend waiting for some legal clarity before trying to catch this falling knife.