Even in bankruptcy, WeWork has brought investors on a roller coaster ride.
Shares surged by 92 percent on Wednesday — the first day of trading after the co-working giant filed for bankruptcy — Bloomberg reported. At one point, shares jumped as much as 102 percent compared to where it closed last week, peaking at $1.69. It ultimately closed the day at $1.60 per share.
The turbulent stock didn’t stop fluctuating after Wednesday. By the time the market opened on Thursday, the stock was down to $1.04, but spent the day steadily rising, only to plummet down to $1.26 at the last minute. The stock fell by 7 percent in the first 45 minutes of trading on Friday morning.
Stock bumps after a company files for bankruptcy protection have become somewhat normal, despite the counterintuitive nature of betting on a company seemingly heading towards financial disaster. Speculators snap up the stock in hopes of winning a short bet, but are faced with a high risk due to high borrowing rates and the looming threat of WeWork’s equity to be wiped out in bankruptcy.
WeWork’s stock was one of the litmus tests for the company’s struggles after going public in October 2021. The stock debuted at $13, but the share price had dropped 99 percent to 13 cents in August.
In September, the company executed a 1-for-40 reverse stock split to avoid being delisted by the New York Stock Exchange. Even with the momentary share price bump, the stock kept plunging. WeWork’s market capitalization at the end of last week was $45 million, a pittance compared to its $47 billion peak.
Ultimately, the bankruptcy will zero out the stock, giving investors limited time to make their moves.
While investors play chicken with WeWork’s stock, the company is exiting its money-losing leases and subjecting other creditors to receive pennies on the dollar.
The company’s cutback on leases began immediately. WeWork has canceled leases across the country this week, including 40 lease rejections in New York City alone. The company is working with Hilco and is in negotiations with 400 landlords to rework leases.
— Holden Walter-Warner