WeWork (NYSE:WE) shares traded nearly 9% lower on Wednesday after the embattled provider of coworking spaces announced its CEO and Chairman Sandeep Mathrani will be stepping down, effective May 26.
He will be replaced by current WeWork board member David Tolley as interim CEO.
“Having worked with David Tolley over the last several months, I know that his financial acumen and leadership will keep WeWork moving forward as it continues to disrupt and lead the industry,” said Mathrani.
The company also reaffirmed its Q2 guidance for revenue of $840 million to $865M. Adjusted Ebitda is still seen between negative $10M and positive $15M.
Mizuho analysts downgraded shares to Neutral after acknowledging the broker was wrong to previously rate WE shares as a Buy.
“We see the change in CEO as disruptive, especially amid the current macro headwinds. The macro headwinds have been exacerbated during the past two months with higher corporate layoffs and bankruptcies. We now see our base case business assumptions, specifically occupancy targets, as unachievable, leading to higher cash burn and eventually driving the need for outside capital. We do not see FCF positive till YE25,” they said in a note.
The new price target is $0.30 per share, down from the prior $1.75.