WeWork (WE) announced a new plan Friday to save its plummeting stock from getting kicked off the New York Stock Exchange, less than two weeks after telling investors it had doubts about its ability to stay in business.
The troubled company, which operates co-working spaces, said it will proceed with a 1-for-40 reverse stock split of its outstanding shares, meaning that 40 shares of WeWork stock will be swapped for a single share.
The reverse stock split is a bid to boost WeWork's ailing stock price and save its shares from getting delisted. Stocks must retain a $1 minimum closing price to continue listing on the NYSE. If a stock remains below that level for a "substantial period of time," NYSE rules state that the exchange reserves the right to remove it.
Shares of WeWork have nosedived since the start of this year. The stock is down 90% year-to-date and continued falling on Friday, closing just above 14 cents.
WeWork's reverse stock split will be effective at 4:01 pm Eastern Time on September 1 and begin trading post-split at the market open on September 5.
WeWork's effort to retain good standing with the NYSE comes after the company announced earlier this month that it had "substantial doubts" about its ability to stay in business. WeWork was once valued at $47 billion, but it never entirely recovered after a failed attempt to go public in 2019 revealed the company's staggering losses and numerous potential conflicts of interest with co-founder and then-CEO Adam Neumann.
WeWork's uncertain future comes at a particularly challenging time for the entire commercial real estate sector. Office property valuations have sunk since the pandemic gave way to a rise in hybrid working, and many major companies have slashed their physical office presences.
The company said it has struggled with elevated costs, cash burn, and high membership turnover. WeWork reported a net loss of $397 million in the second quarter.
WeWork's management recently outlined a turnaround plan to improve its financial health. The company said its ability to stay in business over the next 12 months would be "contingent upon successful execution" of that plan.
As part of the plan, WeWork said it will try to lower rent costs by renegotiating more favorable lease terms for its office spaces. It will also try to reduce the number of canceled memberships. Members pay to rent desks at WeWork's office spaces.
The company had faced growing uncertainty in May when WeWork's chief executive officer and chairman, Sandeep Mathrani, unexpectedly stepped down after more than three years with the company. Board member David Tolley was named the interim CEO.