Last week it seemed as though WeWork’s post-Adam Neumann comeback was fully unraveling. The company’s stock was tanking and its CEO resigned. 

And today we learned that one of the opportunities that we believed might save WeWork may be materializing.

First the Bad News

Company CEO Sandeep Mathrani, who stepped in to provide adult supervision as WeWork staged a comeback after the WeCrashed era of Adam Neumann, has resigned. Mathrani took the reins at WeWork back in February 2021. 

Mathrani will leave on Friday. WeWork board member David Tolley will replace him on an interim basis. Tolley will keep the CEO chair warm while WeWork searches for a new CEO. Today we also learned that the company’s CFO Andre Fernandez will step down on June 1. 

WeWork went public in October 2021 via the SPAC mechanism (by merging with BowX Acquisition Corp.) about a year and a half after its IPO imploded. 

The collapsed IPO in late 2019 was the final movement of the symphony of grandiosity that characterized the reign of Adam Neumann. How else does one get Jared Leto to play you in the docuseries? Just watch the highly entertaining WeCrashed and you’ll get the idea. 

Under Newmann, WeWork (now trading as WE) raised more than $10 billion from Softbank and had a peak valuation of $47 billion. 

At the time of the SPAC, the valuation had settled to what seemed at the time a more reasonable $9 billion enterprise value. Today, the company has a market cap of about $160 million. 

Today WeWork’s stock is trading at about $0.21. The stock’s 52-week range is $0.19 to $8.08. 

WeCrashed, indeed. 

So There’s Good News?

One of the few bright spots hanging over WeWork since the pandemic was a sense that the new normal of work (work from home, hybrid work, and so on) presented a comeback opportunity for the co-working empire. 

And WeWork under Mathrani, an experienced real estate executive, seemed to lean into this opportunity of working with enterprises to consider WeWork as a workspace option for expansion and for hybrid and remote workers.

We were not alone in pointing out this opportunity. We wrote about this back in April 2021, and we shared this quote from Scott Galloway, aka Prof G, whose famous “We WTF” screed helped torpedo WeWork’s IPO. The quote is from an article Galloway had published a week earlier.

“In New York, new office space is coming on the market 59 percent leased, down from 74 percent pre-Covid. San Francisco went from its lowest-ever office vacancy rate to its highest in the same year, and office rents are set to decline by 15 percent. The worst may be yet to come. Analysts predict that commercial vacancy rates will rise from 17.1 percent in 2020 to 19.4 percent in 2021, besting the previous high of 17.6 percent in 2010.”

As we wrote recently, office vacancy rates do remain very high in major U.S. cities as companies struggle with back-to-work policies. This does seem to be a tailwind for WeWork, and the company has been trying to take advantage. 

Refreshed and ‘Adam’-less WeWork Poised to Seize Post-Covid Opportunity

Here’s one example. When the Boston Consulting Group expanded into the Carolinas, it opened its first office there at WeWork One City Center in Durham, N.C. 

WeWork press announcements over the last year or so have generally featured partnerships in this vein. 

And more of this kind of news came in today. Only bigger. It appears that Amazon will take over 70,000 square feet at the recently refurbished Moore Place facility in London. The space is expected to accommodate about 1,000 Amazon employees. 

So will the enterprise play be enough to save WeWork? That’s unclear. But it does reflect a much different, and more sober, than the 24/7 party culture that characterized WeWork under Neumann.