WeWork Inc. is trying to turn a profit before its once formidable cash reserves run out, the Wall Street Journal reported. The Federal Reserve’s efforts to fight inflation have made that harder. Recession fears and tech-industry job cuts are weighing on demand for co-working desks. Meanwhile, money-losing companies such as WeWork are squeezed by higher interest rates, which have made debt harder to come by and the promise of future profit less appealing to investors. WeWork, saddled with expensive long-term leases and more than $3 billion of debt, recorded a negative cash flow of around $4.3 billion between July 2020 and September of this year. It has been able to cover its losses partly with loans and equity investments from its biggest backer, SoftBank Group Corp., which to date has sank more than $10 billion into the business. WeWork has burned through nearly all of it. The company has $500 million in undrawn debt commitments from SoftBank and has said it expects to end 2022 with $300 million in cash, less than one-third of what it had at the end of 2021. Its debt contracts allow it to borrow another $500 million. WeWork chief executive Sandeep Mathrani said that the company has enough resources to make it through next year, even if its occupancy drops by 10 percentage points. In November, WeWork said that it would close 40 money-losing U.S. locations, and Mr. Mathrani said he can close more to preserve cash.
