What’s going on:
Coworking space provider WeWork experienced a severe decline in its share price this week, plummeting by 13% on Tuesday, according to The Motley Fool. The drop follows a major announcement during the market afterhours on Monday where a group of top stockholders in the company announced that they were planning to sell nearly 90.8 million shares.
The Motley Fool reports that the firm that holds the largest position, Teton Capital Partners, is planning to sell 32 million shares. WeWork’s share price opened Thursday morning at $0.2033.
Why it matters:
As one of the pioneers in the coworking industry, WeWork’s struggles raise questions from some investors about the sustainability and viability of the industry. The drop in share price comes as the company is grappling with both financial challenges and major leadership changes. Recently, the company announced the resignation of CEO Sandeep Mathrani and CFO Andre Fernandez. Both leadership announcements were within a week of each other.
How it’ll impact the future:
WeWork’s organizational and financial challenges could undermine the confidence of major investors who are considering investments in the coworking industry. These kinds of high-level investments, or lack thereof, may potentially impact the availability of flexible workspaces for freelancers, startups, and remote workers. However, there is also a growing number of large employers, like Farmers Group and Facebook, that are asking workers to come to the office for a few days out of the week. These workforce trends show that businesses are embracing hybrid work models.
As WeWork struggles internally, this may lead to increased competition and innovation within the industry as major employers like Amazon are embracing coworking spaces.