What’s going on:
WeWork’s shareholders voted in favor of a reverse stock split according to Market Watch. The decision was reportedly supported by 598 million shares, while nearly 5 million voted against it and fewer than 150,000 abstained. Shareholders approved a reverse split in the range between 1-for-10 and 1-for-40, with the final ratio to be determined by the company’s board.
The vote to approve the stock split is a strategy to raise the company’s share price as it faces the risk of being delisted from the New York Stock Exchange (NYSE). When a company’s share price does not meet the exchange’s minimum price requirements, it may be at risk of being delisted due to not meeting the exchange’s minimum price requirements. By implementing a reverse stock split and increasing the share price, WeWork aims to regain compliance with the stock exchange listing standards.
Why it matters:
The news of WeWork shareholders voting a stock split comes at a time when the company has limited options left on the table. On top of the company facing a potential delisting from the NYSE, it has faced numerous challenges this year, including the resignation of CEO Sandeep Mathrani, and CFO Andre Fernandez.
The reverse stock split aims to stabilize WeWork’s share price and improve investor confidence. The company’s share price has experienced an 82.8% decline year-to-date, according to Market Watch. Shares opened Monday at 23 cents.
How it’ll impact the future:
The outcome of the reverse stock split will likely impact WeWork’s ability to recover and be officially traded at the NYSE. The potential success, or failure, of the strategy will influence the company’s potential to attract new investors and secure funding for further expansion.
As WeWork continues to evolve and adapt to its own economic challenges and to new market conditions, the company’s success or failure will leave a mark on the rest of the coworking industry. The company’s ability to regain a good standing with the exchange could drive up demand for shared workspaces.