FILE PHOTO: A WeWork logo is seen outside its offices in San Francisco, California, U.S. September 30, 2019. REUTERS/Kate Munsch/File Photo
NEW YORK (Reuters) – WeWork said on Thursday it is laying off around 2,400 employees globally, as the office-sharing company seeks to drastically cut costs and stabilize its business after it transformed from a Wall Street darling into a pariah in a matter of weeks.
“As part of our renewed focus on the core WeWork business, and as we have previously shared with employees, the company is making necessary layoffs to create a more efficient organization,” a company spokeswoman said in a statement.
“This workforce reduction affects approximately 2,400 employees globally, who will receive severance, continued benefits, and other forms of assistance to aid in their career transition,” the New York-based company added.
The job cuts are the latest sign of how far WeWork’s prospects have deteriorated from being worth $47 billion in January and planning in September an initial public offering (IPO), to a company that was facing a cash crunch and fighting for survival.
It shelved its plans for the IPO on Sept. 30 because investors were wary of its growing losses, its business model and its corporate governance. WeWork co-founder Adam Neumann resigned as CEO the previous week.
The company itself had 12,500 employees on June 30, and there are others who work for affiliates.
The long-anticipated layoffs are the biggest move yet by Japanese technology investment company SoftBank Group Corp, which is providing a $9.5 billion lifeline and will soon own about 80 percent of its shares, to make sure WeWork refocuses on its core business and on trying to make money.
Under Neumann, WeWork had become bloated, was diversifying into all kinds of areas – including setting up a school and running apartment buildings – and was expanding at a breakneck speed without any clear route to profitability.
Reporting by Sheila Dang and Carrie Monahan; Additional reporting by Joshua Franklin; Editing by Marguerita Choy and Nick Zieminski