WeWork (WE) Plans To File For Bankruptcy

Nicole Lordis-, live on the floor of the New York Stock Exchange. Our developing story this morning with Kevin Green, senior markets correspondent here on Schwab Network. And we’re talking about WeWork, potentially filing for bankruptcy as soon as next week. ORC. This is a stock that went from $130 to $1, basically. What is the potential here and what are you following most closely when it comes to this story? Yeah, we are seeing the shares down around 51% just in the session alone. And as you talked about, it has 1 Handl when it comes to the share

price here. So this is a wall Street journal report that they potentially could be filing Chapter 11 bankruptcy. Now what this allows them to do is be able to continue their operations, but work with their creditors, if you will, in order to try to figure out a way to repay their debts. That has been the issue for this company, obviously, as you see the stock price. But this has been an issue. The debt service in itself continues to go up. Obviously if they’re not making any type of profitability or revenue or stream of revenue, that

could have an issue when it comes to trying to repay those debts. So this is where we are at right now in the process. And one of the things that I’m

going to be focusing on is, one, how are they going to be able to work out some of these agreements with their debt holders and then, two, if they do have to actually potentially sell some assets or sell some property in order to try to raise money, that could also provide us a little bit of insight on what’s going on in the commercial real estate

market. We know that this business model has been a little bit challenged, especially when we have the work from home environment that has been prevailing within the marketplace and we can kind of see some of the exposure on this map. I mean, they have a significant amount of exposure in San Francisco, Los Angeles and in New York. Here now, the New York commercial property segment has actually been pretty well. But when you look at the West Coast, especially in San Francisco, not so much. So I think that provides us a little bit of insight on

what those valuations are looking like potentially here in the future. Yeah. So 51 properties there in New York and all around the country. That’s a great map there. And it just shows how, you know, investors, they need to be very aware when you’re when a company is filing for bankruptcy, there can be a lot of volatility in the stock. Some people like to play that, but there’s always the warnings on that. Yeah, definitely. And you just called that out. I mean, we’ve seen several different companies that have been either in bankruptcy or on the verge

of bankruptcy. And we see a lot of volatility, some of that could be done by short sellers and then those that are coming in and trying to spike the shares to the upside. But when you’re looking at the overall process in itself and the fundamentals of a business, a bankruptcy filing is not great. Now, a big chapter 11 bankruptcy is a little bit better than maybe some of the other types because once again, it’s trying to restructure with their creditors. But at the end of the day, the probability is really against them when it comes

to trying to add new valuations. One thing to also note here, Nicole, in 2019, their valuation was at $47 billion. I think you brought that up. Right now, their market cap is at $58.58 Billion. It’s just remarkable. So definitely stay very cautious when trading this name. It’s unbelievable. And Adam Neumann back in the news, even maybe competing. I’m sorry. Can you say that one more time? Adam Neumann, I think he’s back in the news. I mean, he might even be competing with WeWork now, right? Yeah, potentially. I mean, there’s going to be a lot of

players there that are going to be within this space. Let’s see how this all definitely pans out here. I do know that when you’re looking at some of the bondholders and shareholders of this company, it’s SoftBank, which has had a really tough time when it comes to WeWork, as well as King Street Capital Management. So they are actually in favor of this restructuring. But you are correct, there’s a lot of players that are getting into this, and we’re starting to see, you know, you’re starting to see some people coming into the space that could challenge

this market in the near term. Yeah All right. Thank you so much. I saw Adam Neumann has this one company flow so people can watch that. We’ll see how this all turns out