WeWork has revealed that it doubled its revenue in 2018 to $1.82 billion, but also doubled its losses. If that view wasn’t grim enough, occupancy also fell to 80%, indicating that the mega coworking firm is creating more supply than demand.
WeWork’s vice chairman Michael Gross said that the company is sitting on about $6 billion in investment from none other than SoftBank, who has valued WeWork at $47 billion. Despite this, WeWork may be living in a real estate bubble that is getting ready to burst.
The nearly $2 billion in losses are operating losses and not investments into new office projects. Once the company leases office space and furnishes it, it takes about 18 months to fill it up, which in turn can rack up expenses.
Still, members may not need desks for a long time, so turnover is frequent. Even some freelancers who know a thing or two about technology don’t require the space in the first place.
Overall, if WeWork continues down this path, coworking may lose some of its finesse.