Shares in mortgage fintech Better crash on market debut
Shares in mortgage fintech Better crash on market debut

There is only one word in the English language that comes close to the essence of fintech Better.com’s trading debut — bloodbath.

When the market finally closed on Thursday, 93% of the investor money that took over the online mortgage lender evaporated in a single trading day.

Founder Vishal Garg, who worked “very, very hard” to overhaul himself to be a better CEO after mass firing hundreds of staff via Zoom call, probably didn’t expect to be as fairy-tale as VinFast Auto this month debuted.

But judging by his comments earlier in the day, it’s safe to say he wasn’t expecting the company’s stock to spontaneously combust either.

“This is a moment to celebrate” he trumpetedSuccessfully completed the merger with the listed empty vessel Aurora Acquisition Company. “We are proud to take a major step forward in expanding our ability to innovate the homeownership process by becoming a public company.”

Hours later, as the stock price skyrocketed, a failed-looking treasurer sprang into action. Yahoo Finance Live to explain the catastrophic plunge. From the company’s perspective, the reverse merger with Aurora SPAC — a deal more than two years in the making — was actually a lifesaver, he argued.

because better website lock in its valuation Along with investors, the merger means the company can now raise $568 million in cash during the peak of a speculative bull market in 2021 to help in an environment where the cost of a 30-year fixed-rate mortgage has soared to a 23-year high Survive. .

“There are 4,000 mortgage lenders in the U.S. If rates stay high for a long time (…) I think a lot of companies are going to struggle, a lot of companies are going to disappear,” said Kevin Ryan, Better’s chief financial officer in the interview and online publications. “We just shored up our balance sheet at a time when no one really thought anyone in this industry could do it.”

Plus, no one was treated unfairly — everyone was equally killed in Thursday’s crash. That’s because no early investors, presumably including financial backer SoftBank, have cashed in on the SPAC deal’s boosted 2021 valuation as exit liquidity, Ryan said.

He promised that any money raised would go directly to helping businesses, not pocketing them.

‘This is just the beginning’

Still, a 93 percent plunge in its debut was a far cry from the outsized success of VinFast Auto, which also eschewed the usual rigors of a traditional IPO in favor of easier access to the market through a SPAC.

The Vietnamese start-up sold a total of 18,700 electric vehicles in its six years of existence, some of which were of such poor quality that they are now obsolete compensate angry customers— Cleverly crafting the August listing to ensure that there is little to no free float.

This upends the traditional role of the market as a price discovery tool, enabling it to be realized on paper $120 billion market capitalization The company is the third most valuable automaker in the world, behind Tesla and Toyota.

In the process, founder and chairman Pham Nhat Vuong’s net worth soared almost overnight.He is now No. 28, according to Forbesthe th The richest person on earth, second only to Nvidia CEO Jensen Huang.

Better’s Vishal Garg on any hope of joining the publication List of Prominent Billionaires Probably dead and buried now.

It would need to rise 769% from current levels just to get back to the $10 price it started Thursday with.this means Friday’s pre-market rally A 14% gain at press time would only take it back to $1.31 — in other words, what traders are calling a “dead cat bounce.”

For investors with pennies left, Better’s Kevin Ryan has these words of comfort.

“We’re creating long-term value for our shareholders,” the chief financial officer said. “This is just the beginning.”

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