WeWork, the troubled unicorn company from the iconic Silicon Valley, has cut over 2,000 jobs globally from their staff in an extreme cost-cutting measure designed to help cover the company’s ever-growing losses.
The office rental company, which has central offices in both New York and London, has been mired in controversy and produced some less than favourable figures during its quarterly profit announcement.
The axing of these positions comes after WeWork’s plans to float on the New York Stock Exchange collapsed, despite an early valuation of approximately $8bn. Reports suggested that the company was unable to procure the equity required to sell off its shares due to lack of investor interest.
High Risk High Return, Possibly
The company has always struggled to make a profit – as is very common for high risk, high return tech companies – but its most significant losses came in the first half of 2019, where it lost almost $1bn.
Serious questions about the handling of finances and its former CEO have dogged the company throughout the year and some analysts are suggesting that this encouraged investors to stay away from the volatile investment.
In response to the cuts, WeWork suggested in a statement that they were choosing to refocus on the core ethos of the company and that involved making significant cuts to their staff across the world.
According to reports, international employees were the first to know that they had been let go from the tech firm – with some suggesting in interviews with major newspapers that they were forced out of their positions with little warning.
However, it remains unclear as to whether WeWork’s biggest backer, the Chinese firm SoftBank, will continue to back it under their transformed image. The company suggested in a statement that they’d made a wrong decision when it came to WeWork.
The company has been planning to float on the New York Stock Exchange to raise some much-needed cash by the end of this year.
Other ‘unicorn’ companies, who have struggled to make profits and thus turned to the stock market including Uber, Lyft and Airbnb, have had less than promising starts and some experts are already starting to question if the flotation bubble has burst in the world of tech.