Chinese coworking operator Ucommune has reported near record-high losses for 2021 due to dwindling demand in the region.
The total loss came to $333.7 million for last year, where the majority of losses occurred during the fourth quarter.
The firm reported that three of its units saw a dip in valuation compared to their book value as Covid lockdowns kept people at home and demand remained shallow.
Additionally, Ucommune saw its memberships fall by 10.9% for the third year in a row.
To help accelerate a profit return, the company began transitioning to an asset-light model in 2020.
Through these operations, Ucommune franchises office spaces, providing them with design, constructions, and management services, which does not require a massive upfront investment.
By the end of last year, 32% of Ucommune spaces were contracted under the asset-light model. During the fourth quarter of 2021, revenue from the asset-light model increased around 79% compared to the year prior.
According to CEO Guan Xin, Ucommune will continue to explore their asset-light approach and potentially offer new products and services, such as marketing solutions, real estate management systems, and more.
However, the mounting losses indicate that pivoting to an asset-light model isn’t enough to keep the operator afloat, particularly from investors’ point of view.
In April, the company merged 20 common shares to keep its share prices from dipping below $1. In early May, the firm saw its shares fall to $3.34, meaning its price has fallen 98% from its original listing in 2020.
