WeWork CEO out amid cash crunch

WeWork, the office space sharing company that has become the biggest tenant in New York City and a major force in driving commercial real estate prices around the U.S., is replacing its founding CEO as it struggles to go public and raise enough cash to keep it going past Valentine’s Day.

Facing pressure from major investors and the company’s board, WeWork on Tuesday announced that founder Adam Neumann would step down as chief executive. He is being replaced by Artie Minson and Sebastian Gunningham, WeWork’s chief financial officer and vice chairman, respectively, who will now operate as co-CEOs. Neumann will stay on as chairman of the board.

The company will likely try to restart a planned initial public offering — put on hold last week — without Neumann at the helm. The entrepreneur has been the creative force behind WeWork’s fast growth, but was seen as an erratic and controversial chief executive whose leadership seemed to spook potential investors in the IPO.

But even without Neumann, WeWork faces a bigger problem that a new CEO alone won’t fix: A significant cash crunch that could jeopardize WeWork’s future in a matter of months. 

According to CBS MoneyWatch’s calculations, based on WeWork’s latest financials that were released as part of the documents that were filed for its stalled IPO, WeWork has about five months cash on hand — or around $1.5 billion — before it will either have to raise more money or face questions about its prospects. 

WeWork declined to comment for this article.

Many have dismissed the idea that WeWork faces a cash crunch. The company had $2.5 billion in cash as of the end of June, which is the latest financials it has released, and growing revenue.

But based on its current losses, and promises it has already made to previous lenders, that money may not last long. WeWork’s operations ran though nearly $200 million in cash in the first six months of the year. The company also had nearly $18 billion in interest payments. 

—This is a developing story.