“We looked at our plan, we saw what we did in 2020 – and we saw a path to profitability – and we thought it was a good time to raise additional liquidity,” said Sandeep Mathrani. WeWork CEO, told CNBC on Friday.
In the past, the company has struggled to deliver on high projections. Even if flexible working arrangements are the order of the day, WeWork could face intense competition for tenants. New York, London, San Francisco, and other big cities are full of cheap sublet space being brought to market by companies planning to keep fewer office employees.
Landlords may also hold back from doing business with cooperating companies after suffering huge losses during the pandemic. one, Knotel, filed for bankruptcy protection. Building owners can also choose to offer tenants flexible space themselves to exclude cooperating middlemen like WeWork.
“If I’m an office landlord, the Covid experience may have told me that people need flexible space,” said Daniel Ismail, senior analyst at Green Street, a real estate analysis and consulting firm. “But in what form should I provide that? Should I do this myself or work with someone? “
Some analysts said WeWork could still be under financial pressure after each cash infusion. Debt has grown and it appears that lease obligations – the amount of money WeWork owes landlords – are still onerous, said Vicki Bryan, executive director of Bond Angle, a research firm specializing in debt.
“They haven’t solved the problem with their business model – they have high leases,” she said.
As a sign that Wall Street investors are optimistic about WeWork, BowX shares closed 20 percent on Friday.
The road to a deal was cleared last month when Adam Neumann, co-founder of WeWork, and SoftBank settled a lawsuit.