Oh WeWork (WE), will you ever be issue-free? The office-sharing provider, which was previously going through some growth issues exacerbated by the pandemic, has launched itself into issues with its finances as of late.
The company recently went public in October 2021 through a SPAC merger, and on Wednesday announced that it’ll have to restate financial results spanning back a bunch of quarters. It uncovered issues with how its common shares were classified at the time of IPO — part of them were seen as standard shares, when in fact they had ‘redemption’ features. These are basically conditions built into the shares, which allow its holders to convert them for a fixed amount of cash (making them not technically ‘purely’ common shares). Due to the error, financial statements for the entirety of 2020 and the first three quarters of 2021 will be redone.
Why it matters
Before going public, when WeWork filed with the SEC, people were already concerned with its financials which showed rising losses of $1.9b in 2018. This blunder now puts investors further on edge, as its shares dropped by 1.7% yesterday at market close.
