- Better.com's tumultuous journey: Layoffs, losses & SPAC merger.
- Better Home & Finance Holding: $565M infusion post-SPAC merger.
- Better.com's stock plunged 93% in a day after the SPAC deal.
COVID-19 is one of those segments of the present that would be considered a historic event in the fields of medicine, finances, development, and whatnot. One of the effects of the pandemic was laying off employees. Yes, people were jobless during the course, but imagine being suspended out of nowhere on a Zoom call.
It was in 2021, that the founder of Better Company laid off 900 employees on a Zoom Call, out of which 250 were suspended due to theft in the company. What would be the reaction of those 900 employees, who gave their all and were a major part of the company?
Although, Vishal Garg apologized and accepted that it was a reaction and notified that, “he blundered the execution.” It definitely affected the company. After a couple of series of events, Better.com incurred a net loss of $89.9 million during the first quarter and implemented a workforce reduction of approximately 91% over a period of approximately 18 months.
Despite a reduction in losses compared to the $327.7 million net loss incurred during the same period in 2022, the company continues to encounter obstacles due to elevated mortgage interest rates and a sluggish national housing market. (Source: TechCrunch)
Following the successful merger with SPAC Aurora Acquisition Corp., the newly formed entity has been named Better Home & Finance Holding Company. This transaction has resulted in the infusion of approximately $565 million in fresh capital for Better.com, which includes a $528 million convertible note from affiliates of SoftBank and additional common equity from funds affiliated with NaMa Capital (formerly Novator Capital), an esteemed investment firm that sponsors Aurora. (Source: TechCrunch)
But hold on, why are we learning about this? That's because, currently the shares of Better have fallen down by 93% in just one day!!
What is SPACs?
Just to be clear, SPACs are shell companies that raise funds through a public listing with the goal of acquiring a private company and taking it public. Investors in the SPAC typically have the option to redeem their shares before the merger. But, on Thursday i.e. 24th the market closed at $1.15.
As mentioned, those who invest in SPACs are often bestowed with the privilege of bailing out their shares prior to the imminent merger. With the Better-Aurora merger now a certainty, a hefty $550 million injection from SoftBank awaits Better.com, poised to fuel the expansion of its mortgage product repertoire.
Even in the face of an initial stumble in its stock's market performance, Better.com stands resolute in its commitment to the long-haul game. (Source: Reuter)
"We're not simply chasing short-lived gains, but are diligently constructing a business designed to enrich our investors across generations," asserted Kevin Ryan, Better.com's President and CFO, resolute in the company's vision, as shared with Insider.
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Edited by Shruti Thapa