Shares of Better.com, the mortgage lender whose CEO famously fired 900 employees over a brutal Zoom call two years ago, plummeted as much as 95 percent on its first day of trade. The company suffered a staggering loss of $1 billion in just over two years, leading to a major drop in its share prices just hours after its public debut. The value of Better.com shares fell so quickly that trading was halted four times in the first 30 minutes. By Friday morning, the shares had plummeted by over 95 percent.
CEO Vishal Garg, who had expressed optimism earlier in the day, did not anticipate such a dramatic decline in the company’s stock. Garg had announced that the merger with Aurora Acquisition Corp. was a time for celebration, as it would expand the company’s capacity to innovate the homeownership process. However, the stock’s rapid decline came as a shock.
The merger with Aurora Acquisition Corp. brought in approximately $565 million in fresh capital for Better.com, including 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 chooses to sell the debt. This agreement could potentially force Garg to sell his Better shares, impacting the stock price.
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 significant workforce reductions, cutting approximately 91 percent of its employees over an 18-month period. The high mortgage interest rates and slowdown in the national housing market have contributed to the company’s ongoing struggle.
Better.com’s reputation has also suffered since December 2021, when CEO Vishal Garg laid off 900 employees on a Zoom call. He accused some of the laid-off employees of company theft, alleging that they over-reported their working hours. The company’s transition from a private entity to a public one has been complicated by mishandled layoffs, allegations of mistreatment towards employees, financial missteps, executive departures, and other claims.
The reverse merger with Aurora SPAC, which had been in the works for over two years, was seen as a life-saving move for Better.com. Garg claimed to have worked hard to be more empathetic and treat people with kindness. However, the company’s disastrous debut on the Nasdaq indicates that the challenges it faces are far from over.
What factors contributed to the dismal performance of Better.com shares on their first day of trading?
Dismal performance of Better.com shares on their first day of trading. The mortgage lender, famously known for its CEO’s controversial firing of 900 employees through a ruthless Zoom call in the past, experienced a staggering decline of 95 percent in share prices. This massive drop came only hours after the company’s public debut and was a direct consequence of the significant loss of $1 billion incurred by Better.com within a span of just over two years.
The alarming pace at which the value of Better.com shares plummeted led to trading being halted four times within the first 30 minutes. Such extreme volatility and rapid decline raised serious concerns among investors. By Friday morning, the shares had suffered a devastating decline of over 95 percent.
Despite CEO Vishal Garg’s earlier optimism, the actual performance of Better.com’s shares on the stock market was unexpected. The severity of the drop caught many by surprise, leaving the CEO and the company’s management to grapple with the aftermath of this significant setback.
Wow, that’s a massive loss for Better.com. Not a good start for investors.