Isn’t it funny how day by day nothing changes, but once you look back everything seems different? Well, this may be the case for most of us, but it certainly wasn’t for Adam Neumann, WeWork’s former CEO.
For him, change began when his company filed its IPO documents, leading to increased scrutiny in the organization’s operations. What no one saw coming was just how shady Neumann had been in running the company, and the losses that WeWork had been suffering all started to make sense.
The IPO filing was done in mid-August, and what followed came to be known as the worst month in WeWork’s history. With Neumann having been at the helm of all this decadence, his personal life was also meant to be in disarray once everything came to light, no?
And by disarray, we mean every syllable in the word. What would you term a 90% decrease in net worth within two months? Back in August, the former CEO was worth $4.7 billion. As at now though, there’s talk about him going bankrupt. How the mighty have fallen!
From the S-1 form that the We Company filed on 14th August, it was revealed that in 2019 alone, WeWork had made losses to the tune of $900 million. The situation has even gotten worse, with Celebrity Net Worth reporting that they are now losing $700 million every quarter.
Shall we break this down to put it into context? $700 million every quarter translates to losses of about $233 million each month, which is the equivalent of $7.7 million on a daily basis! Is there any hope for this company if we’re being honest?
As of 9th October, WeWork had $2.5 billion for daily operations. With the losses the company is making coupled with their IPO being put on hold indefinitely, there’s certainly no reason to assume that there’ll be a huge influx of cash coming their way.
So, how long will the $2.5 billion keep this company afloat? By Celebrity Net Worth’s calculations, they’ll be in business for 200 days at most. This means that within the first three months of 2020, WeWork will be from riches to rags story with no option but to file for bankruptcy.
The Nose Dive
As it stands, all roads lead to WeWork and its former CEO sharing the same fate. You may have understood the woes the company is going through, but don’t you still have questions as to why Neumann’s net worth has taken quite the nosedive?
In 2018, WeWork was valued at $47 billion. The CEO’s stake in the company was approximately 10%, hence his $4.7 billion net worth. Investment banks affiliated to the company drove the narrative that once WeWork went public, its valuation would shoot to over $60 billion. If things had gone according to plan, Neumann would be worth at least $6 billion.
However, we all know how that went, and word on the street is that the man had taken out huge loans using his WeWork shares as collateral. And as it stands, WeWork is worth less than $10 billion, with some media outlets suggesting that for a company with less than 200 days in the business world, it is worth below zero.
Do you now see Neumann’s predicament? He owes a ton of money that he can’t pay back, hence the talk about personal bankruptcy.