WeWork is going to lay off around 2,400 employees which is almost 20% of its workforce as the company is seeking to drastically cut its cost. The Japanese technology conglomerate SoftBank Group Corp, which is providing a $9.5 billion lifeline and will own about 80% of WeWork’s shares in order to refocus the company on its core business.
WeWork under co-founder and ex-CEO Adam Neumann had become bloated and was venturing into different fields including setting up a school and running apartment buildings. WeWork said that the layoffs began weeks ago overseas and continued this week in the United States.
“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,” a company spokeswoman said in a statement.
The company had around 12,500 employees on June 30 and the staff in New York who had been with the company for at least four years were offered six months severance. Moreover, some employees who were laid off laughed and took selfies as they exited the building. A former employee was heard saying, “I’m feeling relieved, it’s been a stressful time.”
“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,” New York-based WeWork added.
The groups that were affected by the layoffs include WeWork’s architecture unit and its technology department. Moreover, WeWork’s junk bond due in 2025 fell 1.125 cents on the dollar sending its yield back to near a record high above 16%. The company has lost around $1.25 billion in the third quarter and is closing or selling peripheral businesses that it set up, including its private elementary school.