Better Home and Finance (NASDAQ: BETR) had one of those IPOs that everyone would prefer to forget last week. In places it’s still listed as Aurora Acquisition and given that they’re now the same company that has fared just as well. Down 94% in only two days seems to be about the consensus before the market opens this morning.
We talked back a while about Aurora Acquisition: Aurora Acquisition (NASDAQ: AURC) stock was up 223% yesterday. It's also - variably - down 17% this morning. Which is about 25% of yesterday's rise gone already. The excitement is, of course that, AURC is a SPAC. Which has a value of the cash inside it and that's it. Except, the value of the cash plus hopes of whatever, or whoever, the SPAC might merge with. So, and even small change in that hope can lead to wild swings in price.
“As it happens Aurora had been bumbling along at $10 and change ($10 being the cash value) and there were entire days that went by without there being even the one trade. Then came that change in hope to deliver the excitement: “Aurora Acquisition shares more than tripled to $36.01 Tuesday after a Monday update from the blank-check company about its merger with Better, a mortgage lender backed by SoftBank Group. Aurora said in a securities filing that it scheduled an Aug. 11 stockholder vote about the deal. Aurora and Better also filed the required forms on July 19 under the Hart-Scott-Rodino Act.”
That didn’t, as it happened, work out well:
We also talked about the actual IPO of Better H&F: The specific problem is this: “Only a fraction of Better shares were available for trading after a vast majority of investors opted to cash in their investments before the SPAC tie-up was completed, SPAC Research data analyzed by Bloomberg shows.” SPAC investors can take their $10 back if they don’t like the look of the deal. Apparently 95% did so in this case. And that’ll crater a stock price, 95% of stockholders taking the cash and running for the hills.
Now, there’s much talk about how much better everything will be once interest rates peak and everyone refinances their mortgages on the slide down the curve. But, well, who wants to wait that long? Or even, why not wait until there’s evidence of that before getting into BETR stock?
