Everyone is going bankrupt

In today’s big story, we’re looking at why WeWork’s bankruptcy filing could be the first of many.

But first, the actors’ union SAG-AFTRA announced Wednesday evening that it had secured a tentative deal with Hollywood studios to end a strike of nearly four months. That means some film and TV productions will be starting up again.

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WeWork, the real-estate company that cosplayed as a tech startup, filed for Chapter 11 bankruptcy this week. It’s not exactly a shocking resolution for WeWork, which first showed signs of its demise during a disastrous IPO attempt in 2019.

But one Wall Street veteran believes WeWork will be the first of many companies to succumb to a similar fate. In a recent note, New Constructs CEO David Trainer said hundreds of “zombie companies” — unprofitable businesses holding significant debt and burning through cash — will also file for bankruptcy, writes Insider’s Jennifer Sor.

Trainer’s concerns aren’t unfounded. More US companies filed for bankruptcy in the first eight months of the year than the total number of bankruptcy filings in 2021 and 2022, according to data from S&P Global.

Defaults on corporate debt have also been on the rise globally, per another S&P Global report. Bank of America estimates we’ll see $46 billion in distressed debt next year.

Rising interest rates have been a key culprit.

After years of a near-zero rate environment, getting money became a lot more expensive. That type of change throws quite a wrench in your plans if your business strategy amounts to burning cash while you figure things out.

The former startup was the poster child for Silicon Valley’s time-honored strategy of not letting a balance sheet get in the way of a good story (see: high valuation).

But those days are long gone now that venture capitalists have tightened their purse strings. That’s resulting in a cash crunch for late-stage companies, forcing them to fold or sell off their best assets, writes Insider’s Vishal Persaud.

It’s not just formerly high-flying tech startups, though. Small-business bankruptcy filings are also on the rise, according to The Wall Street Journal.

Of course, you wouldn’t know things are so bad from WeWork’s bankruptcy announcement. The message reads more like a company on the rise than one legally acknowledging it can no longer pay its debts, writes Insider’s Katie Notopoulos.

But maybe there’s a reason for the optimism. There’s a theory making the rounds that WeWork is considering bringing its eccentric confounder and former CEO Adam Neumann back into the fold.

Because if we’ve learned anything from the WeWork debacle, it’s that no one has learned anything.

🔔 Before the opening bell: US stock futures rise early Thursday, as investors await data on jobless claims and remarks from Fed Chair Jerome Powell.

2. Jeff Gundlach sounds off on US debt. The Bond King is worried about the $33 trillion debt mountain the US has accumulated, warning a recession is on the horizon. Here are the top quotes from a recent interview with the billionaire about “exploding” US debt expenses.

3. Don’t — or do — bet against these companies. ExxonMobil surpassed Tesla as the most-shorted stock in the S&P 500, according to a new report. Other companies investors are betting against include Apple and Airbnb. Check out the top 10 here.

Upway – Your Next E-Bike, Priced Just Right

Upway sells and buys e-bikes from top brands, all priced up to 60 percent off retail. Their master mechanics inspect and certify every Upway e-Bike, backed by a one-year warranty.

2. Amazon is reportedly racing to build a competitor to OpenAI’s ChatGPT and Google’s Bard. Amazon has doubled down on investing in AI. And its new AI model — reportedly codenamed “Olympus” — will likely be incorporated into Amazon’s online stores and smart speakers.

3. Leaked numbers: Google’s fastest-growing product is YouTube TV. The company found that using TVs and tablets boosted watch time. Plus, YouTube has been making recent bets like partnering with the NFL to stream games.

2. Uber co-founder Travis Kalanick’s $15 billion ghost kitchen company lays off staff. Before the Wednesday layoffs, his company had more than 4,300 employees. It comes amid a difficult market for tech with inflation, higher interest rates, and other headwinds.

3. Real-estate investor shares the secret to getting a 5% interest rate. Matthew Tortoriello owns over 700 rental units and has been able to secure rates as low as 2%. He revealed that there are ways around high interest rates, including seller financing.

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Dan DeFrancesco, senior editor and anchor, in New York City. Diamond Naga Siu, senior reporter, in San Diego. Hallam Bullock, editor, in London. Lisa Ryan, executive editor, in New York.

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