Better.com’s Spectacular Stock Plunge: A Wild Ride of Financial Missteps and Abrupt Layoffs
Shares of Better.com, the mortgage lender famously known for its CEO’s ruthless firing of 900 employees through a brutal Zoom call two years ago, saw a jaw-dropping 95 percent drop on its first day of trading. The company’s value took a nosedive, shedding a staggering $1 billion over a mere span of two years.
Thursday marked the public debut of Better.com, and it turned out to be a day of turmoil for the mortgage lender. The shockwaves were felt right from the opening bell as share prices plummeted rapidly, leading to trading halts on four occasions within the first 30 minutes. By the following morning, the value of Better Home & Finance shares (or Better.com shares) had sunk by over 95 percent.
The optimism that CEO Vishal Garg carried with him earlier in the day was shattered as the company’s stock nosedived in a fashion he likely didn’t anticipate. Garg had even expressed his joy over completing the merger with Aurora Acquisition Corp.
“We’re proud to take a huge step in expanding our capacity to innovate the homeownership process by becoming a publicly listed company,” Garg announced, according to Fortune.
This merger resulted in the birth of Better Home & Finance Holding Company, with an infusion of about $565 million in fresh capital. The capital injection included a $528 million convertible note from SoftBank affiliates and additional equity from NaMa Capital, linked to Aurora, an investment firm.
Garg, in an unusual move, personally guaranteed any losses that SoftBank might face if they choose to sell the debt. This arrangement could potentially lead Garg to sell his own Better shares, potentially affecting the company’s stock price.
Despite the injection of capital, Better.com finds itself grappling with ongoing financial difficulties. The first quarter of the year saw a net loss of $89.9 million, prompting significant workforce reductions involving around 91 percent of the employees being let go over 18 months.
Although the company managed to curtail its losses from the staggering $327.7 million net loss at the start of the preceding year, it’s still navigating choppy waters due to high mortgage interest rates and a slowdown in the housing market.
Notably, the company’s reputation has taken a hit since December 2021. The transition from a private entity to a public one has been anything but smooth, marred by mishandled layoffs, allegations of mistreatment toward employees, financial missteps, high-profile executive departures, and other controversies.
From the company’s perspective, the reverse merger with Aurora SPAC was akin to a lifeline. This deal, in the works for over two years, provided some salvation. Garg had been vocal about working hard to transform his leadership style, emphasizing empathy and kindness.
Better.com’s stock debacle on the Nasdaq mirrors the company’s tumultuous journey since CEO Vishal Garg’s controversial Zoom call in December 2021, where he brutally axed 900 employees. Garg accused many of these laid-off employees of “stealing” from customers due to alleged over-reporting of work hours.
The aftermath of this layoff call was captured in a viral video, showcasing the anger and frustration of the affected employees. Garg’s leadership style, marked by erratic behavior, has been a point of contention, and his subsequent attempts to address these issues have been met with mixed reactions.
The Better.com saga teaches a crucial lesson about the unpredictability of the financial market and the delicate transition from private to public. It’s a stark reminder that even in the realm of business, the human element cannot be ignored.