WeWork to lay off at least 4000 employees to reach financial stability

WeWork, a renowned US-based commercial real estate firm, is reportedly planning to lay off more than 4,000 employees this month. Through this step, the company is looking to gain financial stability as it continues to pull out all the stops to reverse company fortunes.

As per the reliable sources, the company would cut up to 2,500 jobs from its main business unit of office-space renting. Moreover, another 1,000 people are likely to leave the company as it closes or sells its noncore businesses like the private school located in Manhattan, New York. Furthermore, as many as 1,000 employees working for building maintenance would be transferred over to an external contractor.

Ultimately, about 6,000 employees stand to be removed from the company. These layoffs are a part of WeWork’s five-year plan to change its fortunes using painful cost cutting measures.

Together, the total jobs being cut would represent about a third of the entire 12,500 workforce the company once employed by the end of June.

The real estate startup received $5 billion from SoftBank in October in the form of a rescue package. In exchange, SoftBank acquired 80% stake in WeWork after the deal. The company would have been out of cash by October end without this rescue package.

Recently, the company stated that it lost about $1.25 billion on the $934 million revenue it brought in during the third quarter that ended in September. Company losses went up by more than 150% from what it recorded same time a year ago.

Reports cite, WeWork opened almost half of its company locations in the 12 month period that ended this September. Most of these new locations are in a loss and might be depleting the company’s cash reserves, which stood at $2 billion by September end.

When Adam Neumann worked as the chief executive for the company, WeWork put billions of dollars in erratic expansion efforts which included adding large office spaces across the most expensive cities in the world. The startup offered discounts to attract potential renters and also acquired other businesses.

The company dropped the idea of going public in late September after investors showed apprehension by looking at the company’s losses, raising questions about the corporate governance of the company.

 

Source credit: https://www.cnbc.com/2019/11/18/wework-planning-to-layoff-thousands-in-cost-cutting-efforts.html