With the IPO and SPAC markets under pressure, no stock had yet been given the reception that online mortgage lender Better.com (BETR) received this week.
Shares of Better.com's parent company, Better Home & Finance, fell more than 90% on Thursday after the company made its debut on the public market following a merger with Special Purpose Acquisition Company, Aurora Acquisition Corp.
Aurora stock closed at $17.44 on Aug. 23, the night before its merger with Better. By Thursday's close, the stock was at $1.15. On Friday, the stock closed at $1.19.
Better's road to becoming a public company was a long one.
Its IPO was delayed last year as the Securities and Exchange Commission conducted an investigation into whether Better had violated securities laws. In early August, the SEC said it did not intend to recommend an enforcement action against the company.
In 2021, Better drew headlines for its unceremonious firing of 900 employees via Zoom. CEO Vishal Garg told TechCrunch this week he's gone through "a lot of leadership training" as he works to rebuild trust with the team.
"We struck this deal in May of 2021," Better CFO Kevin Ryan told Yahoo Finance Live on Thursday. "It was clearly a much better time in the mortgage market. It was a much better time for SPACs."
Asked about the company's stock tanking in its first day of trading, Ryan said, "I don't think we're going to talk about price or focus on price."
But for investors, the price was the story.
"Clearly a dud," Yelena Dunaevsky, a corporate finance and securities attorney and SPAC insurance adviser who did not work on the Better.com deal, told Yahoo Finance on Friday. "This is an example of where a SPAC goes wrong. And we’ve seen definitely some examples of those lately."
"These [companies] are getting shuffled through a downturn like this," Dunaevsky added.
Better's challenges are unique among companies that have gone public via SPAC in that it is grappling with both a poor market for these new listings and one of the most challenging mortgage environments in a generation.
On Thursday, the average 30-year mortgage rate surged to a 22-year-high of 7.23%. And Federal Reserve Chair Jerome Powell said Friday the central bank is "prepared to raise rates further" in an effort to bring inflation back down to the Fed's 2% target.
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