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Why WeWork Stock Plummeted by 13% Today

Motley Fool - Tue Jun 6, 2023

What happened

It typically isn't beneficial for a company when a big pile of its shares goes on sale at once. That was the case Tuesday with beleaguered office space purveyor WeWork(NYSE: WE). Following the announcement that a clutch of top stockholders was unloading their equity, investors understandably sold out of the company. When the smoke cleared, WeWork's share price had fallen by almost 13% on the day.

So what

In a regulatory filing published after market hours Monday, WeWork divulged that a contingent of investors were selling up to almost 90.8 million shares of its stock.

The biggest position among this group of the real estate company's investors is Teton Capital Partners, which is gearing up to sell more than 32 million shares. Several prominent banks and investment managers have smaller stakes; among these is Jefferies, with a touch over 4.1 million.

WeWork emphasized in the document that it will receive no proceeds from the sale as it is not one of the entities divesting stock. The company did not specify when the sale would occur and at what price or prices.

All told, according to data compiled by Yahoo! Finance, WeWork currently has just under 793 million shares outstanding. Therefore, the impact of nearly 91 million hitting the market in a sale will likely be considerable -- hence the sharply negative investor reaction.

Now what

One of the more spectacular and notorious corporate flameouts of the 2010s, WeWork finally came to the stock market in a special purpose acquisition company (SPAC) merger in 2021.

That was in the thick of the coronavirus pandemic and its resultant stay-at-home mandates and trends, though, and the company has struggled ever since to attract sufficient business. It's a very risky stock to own as a result, and we'll likely continue to see more than those institutional investors selling shares.

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Eric Volkman has positions in WeWork. The Motley Fool has positions in and recommends Jefferies Financial Group. The Motley Fool has a disclosure policy.

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