As the threat of recession lingers, WeWork plans to exit multiple locations in preparation for disappointing revenue forecasts.
The coworking firm will exit around 40 U.S. locations due to not meeting “our design criteria, have obsolescence or… an oversupply in the market,” according to CEO Sandeep Mathrani.
News of the exit sent WeWork’s already substandard shares down 15%. The company is forecasting its fourth quarter revenue to sit below Wall Street’s $923.8 million expectation at somewhere between $870 million and $890 million.
In recent months, the New York operator has actually seen an acceleration in activity as more companies and professionals rely on its agile workspace model in lieu of signing long-term leases.
While specific locations have not been named, these exits may cost up to $200 million in rent payments, contributing to around $140 million to its core earnings.
Although the coworking industry has seen an uptick in demand by providing refuge for large companies wanting to reduce costs, recession fears in 2023 is causing nearly every industry to take precautions.