Few companies have seen the fall from grace WeWork (NYSE:WE) has in such a short amount of time. WE stock has gone from around $4.50 per share one year ago to around 16 cents apiece at the time of writing. This includes today’s upward move of 6%.
As a newfound penny stock, volatility can be expected on a day-to-day basis. However, the fact that WE stock has moved higher today is interesting. That’s because this move coincides with Securities and Exchange Commission (SEC) filings that show that Bruce Dunlevie, a former director at the company, just cut his holdings from 2.9% of the company to around 0.5%. Dunlevie resigned from his board position earlier this year.
While WeWork did note that: “Mr. Dunlevie’s resignation is not the result of any disagreement with the Company with respect to any matter relating to the Company’s operations, policies or practices,” it’s clear that investors now view the company as one that’s likely to file for bankruptcy shortly.
Let’s dive into what investors may want to make of this news.
WE Stock Rises, Despite Key Headwinds
In general, for investors to get excited about any turnaround stock, especially one that’s trading in penny stock territory, having insiders on board tends to provide some sense of calm. When absolutely no one wants to own a specific company, no less the people who were most closely associated with that entity, it’s difficult to make a case that retail investors, or anyone for that matter, should jump aboard.
I expect WE stock will likely continue to bounce around these levels for some time. And given it’s now a penny stock, the volatility investors have seen may be set to pick up.
In my view, WeWork, like many companies staring down the prospect of bankruptcy, ought to be approached with significant caution. This isn’t a company long-term investors should be looking at right now, at least in my view. Until insiders start putting their money where their mouths are, it’s time to steer clear.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
