Better.com, a mortgage lender that recently made its public debut, experienced a significant drop in its share prices just hours after its initial offering. The share prices slumped as much as 95%, following a tumultuous period that included the abrupt firing of hundreds of employees via Zoom by CEO Vishal Garg. The drop was so rapid that trading had to be halted four times in the first 30 minutes.
The decline in share prices comes as a blow to Better.com, which has already lost a staggering $1 billion in just over two years. The company’s CEO, Vishal Garg, was optimistic earlier in the day, stating that it was a time for celebration after completing the merger with Aurora Acquisition Corp. However, the stock prices plummeted dramatically, with the value of Better.com shares falling over 95% by Friday morning.
The merger with Aurora Acquisition Corp. brought in approximately $565 million in fresh capital for Better.com. This included a $528 million convertible note from SoftBank affiliates and additional equity from NaMa Capital. Garg has personally guaranteed any losses that SoftBank might incur if it decides to sell the debt.
Despite the infusion of capital, Better.com continues to face financial challenges. The company reported a net loss of $89.9 million in the first quarter and underwent substantial workforce reductions, cutting approximately 91% of its employees over an 18-month period. The high mortgage interest rates and a slowdown in the national housing market have further added to the company’s struggles.
Moreover, Better.com’s reputation has suffered significant harm since December 2021 due to mishandled layoffs, allegations of mistreatment towards employees, acknowledged financial missteps, notable executive departures, and other claims. The transition from a private entity to a public one has proven to be challenging for the company.
The reverse merger with Aurora SPAC was seen as a life-saving move for Better.com. However, the CEO’s past actions, such as the brutal firing of 900 employees via Zoom and allegations of mistreatment, have raised concerns about his leadership style.
Overall, Better.com’s disastrous debut in the stock market highlights the challenges the company faces in the mortgage industry. It remains to be seen how the company will recover from this setback and regain investor confidence.