By In a surprising turn of events, WeWork Inc.’s stock experienced a significant boost on its over-the-counter debut, despite the company’s recent filing for Chapter 11 bankruptcy protection^1^. Trading for WeWork shares was temporarily halted on Monday when the company filed for Chapter 11 in New Jersey, and the New York Stock Exchange initiated the delisting process^2^. However, trading resumed on Wednesday and WeWork’s stock closed its first session as an OTC stock with a remarkable 91.5% increase^3^.
This situation bears a similarity to the case of Bed Bath & Beyond, whose shares also soared after being delisted and traded over the counter following the company’s bankruptcy and status as a meme-stock favorite^4^. Despite its ongoing struggles, Bed Bath & Beyond managed to see a 30.4% increase in its stock on the first session as an OTC stock. However, the company’s shares were eventually canceled^5^.
WeWork’s ability to attract investor attention amidst its mounting issues is similar to Bed Bath & Beyond’s experience. Even after WeWork’s warning that its future sustainability was uncertain, the stock experienced a significant surge amid meme stock speculation^6^. It is worth noting, though, that some users on social media have cautioned about the potential volatility and risk associated with trading or investing in OTC stocks^7^.
It remains to be seen how WeWork’s stock will progress in the coming days and weeks, but this surprising development certainly adds an unexpected twist to the company’s current narrative.
WeWork Stock Continues to Decline Amid Lack of Interest
On Friday, WeWork’s stock experienced another significant decline, leading to concerns among investors. The stock ended Thursday’s session down 21.3%, and a further 12.7% drop was observed on Friday. In contrast, the S&P 500 index saw a 1.3% gain.
Tom Bruni, the head of content at StockTwits, a social platform for investors and traders, expressed his observation that there is a lack of widespread interest in WeWork’s stock. Bruni compared WeWork’s situation to Bed Bath & Beyond and other companies, where restructuring and continued operation were seen as possibilities. However, for WeWork, it appears to be primarily a matter of mathematics. The prevailing belief is that the company will be bought out, but the uncertainty lies in the price of the acquisition and how much cash, if any, will be left for common shareholders. As a result, it is expected that the value of WeWork’s 52 million shares of common stock will ultimately be wiped out.
In this context, Bruni suggests that short covering may have contributed to the recent increase in the stock price in the short term. Some market participants prefer to secure their gains rather than risk being caught by unexpected positive news that could lead to a squeeze. If the high level of short interest starts to generate sustainable upward momentum over several days, other traders are likely to enter the market on the long side.
However, with earnings season currently underway, there is plenty of volatility and news in other sectors for investors and traders to divert their attention. As a result, WeWork’s stock may not be the primary focus for many individuals at this time.
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