Traders Who Bet Against WeWork Reaped $440 Million in Gains This Past Year

Traders who bet on a decline in the stock price of WeWork Inc., the beleaguered real estate company, reaped millions in gains this past year.

(Bloomberg) — Traders who bet on a decline in the stock price of WeWork Inc., the beleaguered real estate company, reaped millions in gains this past year.

Short sellers’ paper profits hit roughly $440 million for the year through market close Wednesday, according to data from S3 Partners LLC. WeWork shares plunged 96% in the 12-month period after a record 25% one-day drop sent them to an all-time low of 26 cents on Wednesday, following the abrupt departure of its chief executive.

The latest stock tumble was sparked by a change in leadership that spooked investors and at least some Wall Street analysts. WeWork announced Tuesday that CEO and Chairman Sandeep Mathrani will depart for a role at Sycamore Partners. Mathrani, who led the company for three years after stepping into the role upon co-founder Adam Neumann’s departure, will be temporarily replaced by board member David Tolley, starting May 26.

The management change prompted analysts at Mizuho to downgrade the stock to neutral from buy and slash its price target to a Street-low of 30 cents, saying it’s a disruption that may hinder the company’s future growth.

Read more: WeWork Plunges as ‘Disruptive’ CEO Change Prompts Downgrade

WeWork’s stock has been largely under pressure since it went public via a special acquisition company in October 2021, about two years after its failed initial public offering. Since opening at $11.28, shares have been on a downward spiral for more than two years.

In March, the stock fell below the key $1 level necessary for listing on the New York Stock Exchange, a situation management would like to address with a reverse stock-split, Piper Sandler analyst Alexander Goldfarb wrote in a note Tuesday following an investor meeting with the company. So far this year, shares have slumped about 82%.

WeWork declined to comment.

(Updates share move after market close in penultimate paragraph.)

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