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SAN FRANCISCO (Legal Newsline) – Stockholders of WeWork are suing the company and its executives, claiming they misled investors about the financial state of the company.
Attorneys at Robbins Geller filed the suit in California federal court on June 12. They say the company failed investors after it gained notoriety for designing offices for companies with features like free beer, foosball tables and baristas.
“WeWork was engaged in profligate spending in a reckless bid for growth at all costs – not in a manner designed to sustainably grow its business, but rather to induce capital raises from investors at ever higher valuations,” the lawsuit says about the time WeWork pursued an initial public offering.
“In an October 2019 slide presentation, after shocking details emerged of the company’s behind-the-scenes excess in the course of its failed IPO bid, WeWork acknowledged it had eschewed a disciplined focus on profitable market expansion during the class period and instead strove to ‘(g)row business commitments prior to funding commitments.’”
It all drove the value of the business down 90%, the lawsuit says.