Better Home & Finance Holding shares rebounded Friday after the company’s public debut got off to a rocky start with a 93% drop.
“Our stock price today is consistent with the current mortgage and high interest rate environment,” Better CEO Vishal Garg told FOX business.
The company, back in December 2021, faced backlash after it laid off 900 employees on a Zoom call. Since, profits have fallen as high mortgage rates crush demand for home loans.
“When the deal was priced in 2021, rates were at record lows. We believe that when interest rates normalize, our technology powered by Tinman will drive long-term growth and create shareholder value,” Garg added. “With $560M in additional capital, we are one of the 5 most well-funded mortgage lenders in the industry.”
Backed by SoftBank, the online mortgage lender completed its combination with special-purpose acquisition company (SPAC) Aurora Acquisition in 2021 but delayed their launch amid regulatory scrutiny and layoffs at Better.
The merger between Better and Aurora will open the mortgage lender to a $550 million infusion from SoftBank, which it will use to expand its mortgage product offerings, CEO Vishal Garg told Reuters in an interview earlier this week.
The company reported a net first quarter loss of $89.9 million in July.
Meanwhile, U.S. mortgage rates continue to surge, with the popular 30-year fixed rate surging to 7.23%, according to Freddie Mac’s report this week, the highest since 2001.
According to an analysis by Redfin, home prices have also increased substantially throughout the year despite a moderate demand for homes.
The average U.S. home price was $382,000 during the four weeks ending July 23, up 2.6% from last year, Redfin said. That represented the most significant increase since November.
FOX Business reporter Javier Simon and Reuters contributed to this report.