WeWork’s End Is in Sight

WeWork did not invent shared office space, but it made it cool. It had 20 million square feet of offices and nearly 1,000 locations at its peak. Its top valuation was $47 billion, about the size of Ford’s, the second-largest car company in America. However, it was overbuilt, and the overbuilding resulted in the collapse of WeWork financially and the start of a series of layoffs. An IPO that was supposed to save it never materialized. (These are America’s 25 dying industries.)

The death blow to WeWork was the COVID-19 pandemic, when people could not work at offices anywhere. WeWork could not afford that downturn in its share rental population. However, it was stuck with the long-term leases it had entered to keep its empire growing.

CEO Sandeep Mathrani left recently, and the chief financial officer resigned after that. Investors must have wondered why they left so quickly. They likely saw that WeWork would go into bankruptcy and they might be pushed out without immediate prospects for work.

WeWork disappeared as it is known today. No one will want the whole company. It is still too large and burdened financially. It will be broken up and its offices will be sold in pieces. Some will be closed completely. At that point, it would be as if WeWork had never existed.

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The issue of overexpansion is among the most significant strategic challenges to companies. If they grow too quickly, they resist unsupportable financial burdens.

ALSO READ: 19 Companies Getting Caught Manipulating the American Free Market

Walmart may be the best example in American history of growth was very rapid but was carefully considered. It has become America’s largest company. No one has ever said Walmart’s rapid growth put it in danger. In reality, if it had not grown, J.C. Penney, Sears and Kmart might still be huge American retailers, and Walmart only a niche retailer with most of its stores located in the South.

WeWork was never a Walmart.

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