WeWork is closing roughly 40 “underperforming” locations in the United States and tempered its revenue forecast for the year, highlighting the challenges the co-working company still faces after its near collapse and subsequent bailout in 2019.
Its third-quarter of this year’s revenue came in at $817 million, which was lower than the five-analyst average Refinitiv estimate of $865 million.
WeWork does not own its buildings but leases office space and parcels it out to customers which include individuals, small businesses, and larger companies. Memberships rose in the third quarter but occupancy was only slightly higher in WeWork’s 242 consolidated locations around the world, up to 71 percent from 70 percent in the second quarter.
WeWork Chief Executive Sandeep Mathrani said that the closures are estimated to cost $200 million in future rent payments for leases, while also contributing $140 million annually to adjusted core earnings.
WeWork have not disclosed the 40 locations that will be closing down, but this move signifies the company’s difficulties in sustaining its business model. WeWork has been trying to reinvent itself after last year’s implosion and subsequent bailout. The company has been working on expanding its services beyond just renting out workspace.
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