No stock had ever received the positive response that online mortgage lender Better.com (BETR) did this week, despite pressure on the IPO and SPAC markets.
Better Home & Finance, the parent company of Better.com, merged with Aurora Acquisition Corp. and went public as a result. On Thursday, after the acquisition, shares of Better Home & Finance plunged more than 90%.
The night before Aurora’s merger with Better on August 23, the stock of that company closed at $17.44. The stock’s closing price on Thursday was $1.15. The stock’s closing price on Friday was $1.19.
It took Better a while to become a publicly traded firm. The Securities and Exchange Commission delayed its IPO last year while it looked into whether Better had broken any securities rules. The SEC declared in early August that it had no plans to propose that the corporation face enforcement action.
Better made news in 2021 when it abruptly fired 900 employees via Zoom. This week, CEO Vishal Garg told TechCrunch that he had undergone “a lot of leadership training” as part of his efforts to regain the team’s trust.
Time of Opportunity
On Thursday, Better CFO Kevin Ryan said on Yahoo Finance Live, “We struck this arrangement in May of 2021. “The mortgage market was obviously in much better shape at the time, and SPACs were in much better shape as well.”
When asked about the company’s stock’s disastrous performance on the first trading day, Ryan responded, “I don’t think we’re going to talk about price or focus on price.” However, for investors, the price was the main topic of discussion.
The Better.com sale was “clearly a dud,” Yelena Dunaevsky, a corporate finance and securities attorney and SPAC insurance adviser who was not involved in the transaction, told Yahoo Finance on Friday.
This is an example of how a SPAC goes wrong, and we’ve seen examples of those lately the speaker said. “These [companies] are getting shuffled through a downturn like this,” Dunaevsky continued.
Better faces issues that are unlike those faced by other businesses that have gone public via SPAC because it is also dealing with one of the most difficult mortgage environments in a generation.
The typical 30-year mortgage rate spiked on Thursday to a 22-year high of 7.23%. Jerome Powell, the chairman of the Federal Reserve, also stated on Friday that the Fed is “prepared to raise rates further” in an effort to get inflation back to its target of 2%.
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Source: Yahoo
