WeWork announced Thursday it is firing 2,400 of its 12,500 employees as part of a plan to save the company from bankruptcy. The company has cut a total of 20 percent of its workforce in a single day.
WeWork doesn’t plan on stopping there, however. It expects to layoff at least 4,000 people: at least 1,000 will come from closing "noncore" businesses like WeGrow, a private school in Manhattan meant to target children of the ultra-rich; another 1,000 building maintenance workers employees have been transferred to an outside contractor.
“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," WeWork said in a statement. "The process began weeks ago in regions around the world and continued this week in the U.S. 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. These are incredibly talented professionals and we are grateful for the important roles they have played in building WeWork over the last decade.”
After WeWork’s IPO was derailed by a close reading of its S-1 documents and financials, its valuation cratered, and the loss-making company risked running out of money in a few months. Bankruptcy seemed inevitable. SoftBank (its major investor) stepped in with a rescue package that brought its total investment to $19 billion—on a company now worth $8 billion, instead of $47 billion—and a $1.7 billion golden parachute for its founder and former CEO Adam Neumann.