Ignore WeWork’s Phantom Rallies and Avoid WE Stock Like the Plague

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WeWork (NYSE:WE), a workspace leasing company, was a buzz worthy “unicorn” startup business in 2021. That was a while ago, but WE stock still rallies sharply sometimes.

Take a closer look at WeWork, however, and you’ll see why financial traders should be wary of this volatile stock.

Even if a company looks like it might go out of business, there are meme stock traders that will push the share price up from time to time. Don’t let this phenomenon entice you into a trap.

Be sure to study any company you’re thinking about investing in. And after studying WeWork and its recent developments, hopefully you’ll be persuaded to avoid WE stock altogether.

A Positive Spin on WeWork’s Financials

After the onset of the Covid-19 pandemic, the concept of renting shared workspaces lost much of its appeal. The work-from-home trend meant that workers would simply hold meetings remotely instead of renting office space from WeWork.

WE stock gets a “D” grade instead of an “F” because WeWork actually demonstrated some improvement in certain areas. During 2023’s second quarter, WeWork increased its revenue by 4% year over year, improving its net earnings loss by $238 million year over year, to a net loss of $397 million in Q2 2023.

Thus, it’s possible to put a positive spin on WeWork’s financials if we cherry-pick certain stats. Still, WeWork’s quarterly net loss was substantial. It’s also not a good sign that three directors resigned from WeWork’s board because, according to The Wall Street Journal, they disagreed with the company’s “governance and strategy.”

WE Stock Rallies Despite Bad News

Strange things can happen when amateur stock traders get active. For instance, WE stock rallied 26% on the morning of Aug. 14 despite the lack of any news relevant to WeWork.

The stock also rallied as much as 40% on Aug. 11 even though WeWork had just announced bad news. WeWork had just declared in a filing, “Our losses and negative cash flows from operating activities raise substantial doubt about our ability to continue as a going concern.”

WE stock was shooting to the moon even though WeWork had just issued a bankruptcy warning. The company even admitted that it may consider “obtaining relief under the U.S. Bankruptcy Code.”

It’s Wise to Avoid WE Stock

At this point, the “going concern” warning is all you really need to know about WeWork. On any given day, amateur stock traders might pump up the WeWork share price. This doesn’t mean you should get trapped in a dangerous trade, though.

WeWork did demonstrate financial improvement in some areas; this can’t be denied. Hence, WE stock gets a “D” grade for now, instead of an outright “F.” Nonetheless, it’s not advisable to invest in WeWork as the company is in danger of failing.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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