WeWork announces 1-for-40 reverse stock split to retain New York listing

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WeWork will exchange 40 existing shares for one new share to bring its stock back above the $1 threshold needed to remain listed on the New York Stock Exchange.

Shares of the U.S. office space company fell about 20% on Friday to below 13 cents, with its market value down 99% from its April 2021 peak of $13.71. SoftBank had valued the company at $47 billion, but its market share was worth less than $300 million.

While WeWork’s decision to move forward with a reverse stock split should resolve compliance with NYSE’s continued listing rules, the company still faces bigger challenges. The group warned earlier this month that it faced “significant doubts” about its ability to continue as a going concern.

WeWork said in a statement on Friday did not expect A reverse stock split “to affect its current or future business operations.” The move will take effect after the market closes on Sept. 1.

The company’s shares closed below $1 for the first time on March 10, according to Refinitiv data, and have stayed below that level since, except for one session later that month.

WeWork was notified by the New York Stock Exchange in April that the group’s share price did not meet the exchange’s listing requirements, which require shares to remain above $1 for 30 consecutive days of trading. It has six months to correct the breach.

The company then decided to do a reverse stock split, and shareholders voted to approve the move in June. At the time, the company proposed performing the procedure in a 10-to-1 to 40-to-1 ratio.

WeWork tried unsuccessfully to go public through an initial public offering (IPO) in 2019, leading to the ouster of co-founder Adam Neumann. The company eventually merged with a blank-check company in a $9 billion deal to list on Wall Street in 2021.

Since its failed IPO, the company has been overhauling its cash-burning business and has exited or amended nearly 600 leases, cutting future lease commitments by nearly $13 billion. The company said earlier this month that its viability depended on further restructuring and seeking more capital over the next 12 months.

WeWork’s second-quarter results missed expectations just three months after a restructuring that slashed about $1.2 billion in debt. It had $690 million in liquidity at the end of June, including $205 million in cash.