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WeWork bonds were already plunging, due to the massive cash burn and dwindling cash pile, and tonight S&P downgraded the company's issuer credit rating to 'B-'.
We warned just a few hours ago that WeWork is rapdily running out of cash, as Bloomberg warns, WeWork’s very business model is now at stake.
WeWork - Office - Space - Companies - Strategy
WeWork has raised more than $12 billion to rent office space that it renovates and then leases to companies. But that strategy has left it in a precarious position. It has some $47 billion of future rent payments due. On average it leases its buildings for 15 years. Yet its tenants are committed to paying only $4 billion, and on average have leases for 15 months.
Those long-term leases “may become an albatross in an economic downturn,” Bloomberg Intelligence analyst Jeffrey Langbaum wrote in a report Wednesday, adding that WeWork needs to find a “clear path to profitability.”
Reminder - Dollar - WeWork - Revenue - Year
And, as a reminder, for every dollar WeWork earned in revenue last year, it lost roughly two.
As S&P details:
Downgrade - Uncertainty - Company - Ability - Capital
The downgrade reflects heightened uncertainty around The We Company's ability to raise capital to support aggressive growth and the pressure this places on liquidity.
These uncertainties stem from the weak reception of The We Company's IPO, partly related to what we view as subpar governance practices. Governance-linked questions and a...
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