On December 1, 2021, WeWork (NYSE: WE) announced in an SEC filing it would restate financial results for several recent quarters due to “material weakness” in its internal controls. WeWork had just recently gone public in October 2021 via a SPAC merger with BowX Acquisition Corp.
On the news that WeWork’s existing financial reports “should no longer be relied upon,” WeWork shares tumbled over 5% in extended trading, causing damage to investors.
WeWork's SEC filing discloses "material weakness," must restate financial results
According to CNBC, the shell company that brought WeWork public, BowX Acquisition Corp., had allegedly incorrectly classified some of the stock it issued in its own IPO as “permanent equity” rather than “temporary equity.”
As a result, WeWork said its own financial reports which had relied on this error must now be restated, according to its SEC filing on December 1, 2021. The reports span from 2020 to the first three quarters of 2021.
WeWork completed its merger with BowX and went public on October 21, 2021, where it was reportedly valued at $9 billion, according to CNBC. Previously, WeWork was forced to abandon an attempt at an IPO in 2019 due to investor scrutiny over the company’s recent big losses and possible misconduct by then-CEO Adam Neumann. At that time, it had been valued at a much higher $47 billion.
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