WeWork to close its New York elementary school next year

Business

FILE this Sept. 30, 2019 file photo shows a WeWork sign on a building in New York. WeWork says it will close its elementary school in New York next year, as the office-sharing company grapples with a cash crunch following its botched attempt to sell its stock on Wall Street. The company said Friday, Oct. 11, 2019 it will close the “WeGrow” school in Manhattan at the end of the 2019-2020 school year. (AP Photo/Mark Lennihan, File)

NEW YORK (AP) — WeWork will close the school it opened last year in New York with the lofty goal of promoting “conscious entrepreneurship” as the office-sharing company retrenches following its botched attempt to sell its stock on Wall Street.

The “WeGrow” elementary and preschool in Manhattan will close at the end of the 2019-2020 school year, the company said Friday.

It’s WeWork’s first publicly announced cost-cutting step since it scrapped plans last month for an initial public offering of stock. The company abandoned the IPO after it generated tepid interest from investors worried about WeWork’s massive losses and corporate governance problems.

The stock-sale debacle posed an urgent funding problem for WeWork. It had hoped to raise $3 billion in the IPO, which would have unlocked $6 billion in financing raised by a group of banks to fund its aggressive growth strategy.

WeWork said the closure of the WeGrow school is part of its efforts to focus on its core office space leasing business, raising the possibility that it could shed more side businesses. Those include a fitness company called “Rise by We,” the co-living rental company “WeLive” and several tech acquisitions, including social media network Meetup.

WeWork is also in talks with longtime financial backers about new financing.

The New York company is burning through about $2.8 billion each year, according to an estimate by Sanford C. Bernstein analysts. At that rate, Bernstein projects WeWork could run out of cash to maintain its current plans by mid-next year. Bernstein estimates that WeWork needs at least at least $6 billion in funding.

As the end of June, WeWork was sitting on $2.5 billion in cash. It has $1.5 billion coming in next year under an earlier deal struck with SoftBank, the Japanese investment firm.

The company’s revenue has more than doubled annually over the last few years, reaching $1.8 billion in 2018, mostly through lease acquisitions. But its losses have mounted almost as quickly, reaching $1.6 billion last year.

WeWork was founded in 2010 and makes money by leasing buildings and dividing them into office spaces to sublet to members. It has locations in 111 cities worldwide and had planned to launch in 169 addition cities, plans that will likely now be pared down.

WeGrow is a for-profit private school that teaches elementary school-aged children and preschoolers starting at age 2. It had been run by Rebekah Neumann, wife of WeWork’s co-founder Adam Neumann who last month stepped down as the company’s CEO.

The school was part of the communal ethos that the Neumanns had promoted as the guiding principle of their company. The program includes yoga, meditation, trips to a Staten Island farm and mentorships with WeWork’s members.

Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Don't Miss

More Don't Miss

Trending Stories

Turkey Day Giveaway

Days

Hours

Minutes

Seconds

Recent Videos

Rage Yoga

Thumbnail for the video titled "Rage Yoga"

First Step remembers those who faced domestic violence at annual Domestic Violence Awareness Month vigil

Thumbnail for the video titled "First Step remembers those who faced domestic violence at annual Domestic Violence Awareness Month vigil"

First Step remembers those who faced domestic violence at annual Domestic Violence Awareness Month vigil

Thumbnail for the video titled "First Step remembers those who faced domestic violence at annual Domestic Violence Awareness Month vigil"

Lawton, WF Chambers of Commerce officials talk 2020 economic growth plans

Thumbnail for the video titled "Lawton, WF Chambers of Commerce officials talk 2020 economic growth plans"

Texoma officials to recognize 'Imagine a Day Without Water' to emphasize conservation

Thumbnail for the video titled "Texoma officials to recognize 'Imagine a Day Without Water' to emphasize conservation"

Prop 4 would make it harder for Texas to implement personal income tax

Thumbnail for the video titled "Prop 4 would make it harder for Texas to implement personal income tax"

Search for 90-pound Texoma tortoise sparks social media storm

Thumbnail for the video titled "Search for 90-pound Texoma tortoise sparks social media storm"

WFPD investigates church vandalism

Thumbnail for the video titled "WFPD investigates church vandalism"

UPDATE: 32 animals seized from Wichita Co. residence

Thumbnail for the video titled "UPDATE: 32 animals seized from Wichita Co. residence"

4-year-old saves drowning sister

Thumbnail for the video titled "4-year-old saves drowning sister"

Pure Horror: Blood flood fills Iowa family's basement!

Thumbnail for the video titled "Pure Horror: Blood flood fills Iowa family's basement!"

Fighting For Their Flag: Family Takes On HOA

Thumbnail for the video titled "Fighting For Their Flag: Family Takes On HOA"
Get FREE Text Alerts
Report It

Latest News

More Local News