Stock

: WeWork inventory falls 5% as the corporate plans to regulate its financials, admits vital weak spot

WeWork announced Wednesday that it would revise its IPO financial metrics and acknowledged a material weakness in its financial reporting control, which caused stocks to fall more than 5% in after-hours trading.

We work
WEATHER,
-2.65%,
Renting the co-working space announced in a filing with the Securities and Exchange Commission that it was required to file revised financial information because it failed to properly account for a portion of its equity less than two years ago when it went public through a special purpose vehicle or SPAC Months.

Many companies that went public through a SPAC were forced to rephrase their financial information in a similar fashion after the SEC cleared rules for SPACs, including well-known SPAC targets like Virgin Galactic Holdings Inc.
SPCE,
-7.13%
and DraftKings Inc.
DKNG,
-9.58%

See also: Virgin Galactic, DraftKings to change financial data under SEC guidelines for SPACs

WeWork went public long after these companies and after they adjusted their finances. The stock began trading as WeWork in October after trading with BowX Acquisition Corp. merged, a SPAC that went public in August 2020. When the SPAC went public, it did not properly account for a portion of its equity and the problem was not fixed upfront. until the merger.

"The company had previously classified some of the public shares as permanent equity," WeWork explained in the filing. "After further evaluation, the company determined that the public shares have certain redemption features that are not solely under the control of the company and which, in accordance with ASC 480-10-S99, require that these shares be fully classified as temporary equity."

WeWork also announced that the misclassification of equity led the management team to identify a material weakness in their financial reporting oversight. It will detail its plans to address the vulnerability in future filings.

WeWork stock fell more than 5% following its release in after-hours trading, after closing down 2.7% to $ 8.46. The shares have traded between $ 8.02 and $ 14.97 since the merger, with the company's closing price estimated at around $ 6.2 billion on Wednesday, according to FactSet.

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