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WeWork, based in New York, was struggling with a heavy debt load and hefty losses for a few years now. Image Credit: REUTERS

New York: WeWork shares tanked over 35 per cent in premarket trading on Wednesday after media reports that the flexible workspace provider was planning to file for bankruptcy as early as next week.

The New York-based firm, struggling with a heavy debt load and hefty losses for a few years now, was once privately valued at $47 billion and now has a market capitalisation of just about $121 million.

The bankruptcy filing would follow a series of troubles for the SoftBank-backed company since its IPO plans imploded in 2019 on scepticism over its business model of taking long-term leases and renting them for short term.

WeWork, which finally went public in 2021 at a much reduced valuation than initially expected, remains a black spot for SoftBank that sunk billions for its investors.

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“Although the facade had started to be chipped away to reveal big losses and high debts before the pandemic, the Covid-crisis put paid to its already weak business model,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

WeWork is mulling over filing a Chapter 11 petition in New Jersey, the WSJ first reported on Tuesday.

The company decided to withhold interest payment due on November 1 on senior notes due 2025, even as it has the cash to make the payment, it said on Tuesday.

The stock was last trading at $1.45 before the opening bell, after losing about 96 per cent of its value this year.