For years, WeWork’s parent company was defined by big spending as it relentlessly pursued rapid growth.
The new co-CEOs, Sebastian Gunningham and Artie Minson, are planning thousands of job cuts, putting extraneous businesses up for sale and purging some luxuries from the previous CEO, like the G650ER jet the company purchased for more than $60 million last year, people familiar with the matter have said.
We Co. had $2.5 billion of cash as of June 30. At its current rate of cash burn—about $700 million a quarter—it would run out of money some time after the first quarter of 2020, according to Chris Lane, an analyst at Sanford C. Bernstein & Co. He and his colleagues projected in a recent note to clients that We would burn through nearly $10 billion in cash between 2019 and 2022, assuming it keeps growing.
Messrs. Gunningham and Minson said in a joint email to staff last week that they “anticipate difficult decisions ahead.”
“As we look toward a future IPO, we will closely review all aspects of our company with the intention of strengthening our core business and improving our management and operations,” they wrote.
Further adding pressure are agreements We made in a bond offering last year, for which it must keep at least $500 million of cash, according to S&P Global Ratings, which downgraded the company’s bonds last week.
The company, which provides shared workspaces, had expected a huge infusion of cash in a public offering. But skepticism from prospective public market investors helped lead to the IPO being delayed and the subsequent replacement of Mr. Neumann with two of his former deputies, and now investors don’t foresee an IPO until next year. The company is in early talks to raise money from private investors, people familiar with those discussions have said.