New York: Co-working giant WeWork Cos. cut about 300 employees this week, or roughly 3 per cent of its workforce, in what it described as performance-related dismissals.
WeWork, which operates shared office spaces around the world, suggested the staff reductions were a small culling ahead of a hiring spree. A spokesman said the company has 10,000 employees and plans to add 6,000 this year.
“Over the past nine years, WeWork has grown into one of the largest global physical networks thanks to the hard work and dedication of our team,” he wrote in an email.
The New York-based company, founded in 2010, has attracted huge piles of investor money, which it uses to snap up office space in the largest cities on earth. Its global march was temporarily impeded in 2016, when the company cut 7 per cent of its workforce. A month later, Bloomberg reported that WeWork had slashed some of its financial forecasts for the year and were encouraging employees to find ways to change the company’s “spending culture.”
By the next year, WeWork was still losing more than it was generating in revenue. Its loss in 2017 totalled $933 million on $886 million in sales, according to documents related to the sale of bonds rated as junk by credit agencies. But WeWork found a key ally that year in SoftBank Group Corp.
Since 2017, WeWork has raised more than $10 billion from SoftBank, a Japanese conglomerate and WeWork’s closest investor, in a variety of deals involving equity sales, convertible debt and warrants. That has put WeWork back on the offensive, especially in Asia, which is driving growth for the business.
Public investors haven’t shown as much enthusiasm for WeWork. The bonds are trading lower than their offering price nearly a year ago. Still, WeWork has said it’s open to an initial public offering in the near future. Showing it can rein in spending will be essential to selling the deal. To that end, WeWork said its sales in the first half of last year were larger than losses.
In January, SoftBank committed an additional $2 billion to WeWork, in a transaction that valued the business at $47 billion. However, the amount was far less than a privately discussed plan, in which the Japanese conglomerate would pay $16 billion for a majority stake. The reduced ambitions were driven partly by declines in tech stocks”-especially SoftBank’s shares, which were down about 20 per cent at the time.