What happened

Shares of WeWork (WE) collapsed by 82% through the first half of 2023, according to data provided by S&P Global Market Intelligence. The notorious start-up and flexible office space provider is far from profitable and close to running out of cash. With office space vacancies growing around the United States even with the rise of return-to-office mandates, investors have lost all confidence this business can ever reach profitability. Since going public in 2020, shares of WeWork are now 97% off of their all-time highs. 

So what

The rise of remote work during the pandemic disrupted the downtown office space world, perhaps permanently. Estimates are that a large percentage of office space in urban areas like New York City is now vacant, with approximately 48,000 floors' worth of real estate sitting empty. This is a terrible environment for WeWork to be operating in, as it has a lot of exposure to downtown office leasing. With a huge supply of office space that corporations can pick and choose from, companies like WeWork are struggling to raise prices on their empty spaces.

This is showing up materially in the company's financials. Last quarter, WeWork burned over $300 million in free cash flow on just $849 million in revenue. It has $14.5 billion in long-term lease obligations on its balance sheet and $3.6 billion in long-term debt. These obligations will need to be paid off over this decade. WeWork will also find it hard to refinance any debt obligations given that it doesn't generate a profit and with interest rates in the United States significantly higher as the Federal Reserve tries to fight inflation.

Its cash position was just $224 million at the end of March. That means WeWork is close to running out of cash while still far from generating any sort of positive cash flow.

Now what

WeWork's business is far from generating a profit and could run out of money shortly. It is no surprise then to see shares down 82% this year and down over 97% since entering the public markets. Investors are betting that the company is not worth much -- if anything -- to the common stockholders under its current operating structure.