With mortgage rates rising to their highest levels in more than two decades, it might not be the best time for Better Home & Finance, a mortgage origination company, to go public via a deal with a special purpose acquisition company, or SPAC.Better completed a merger with Aurora Acquisition Corp. , a SPAC, on Tuesday. Shares and warrants of the combined company began trading on Thursday, under the tickers “BETR” and “BETRW,” respectively.
At Aurora stock’s final closing price of $17.44 on Wednesday, investors were valuing Better at a sky-high $14 billion based on the post-merger fully diluted share count in the SPAC’s latest securities filing. That’s for a company that had only $383 million in revenue last year and lost $889 million. Aurora and Better declined to comment on Better’s valuation.
Meanwhile, Better has had to contend with a recent rate environment that hasn’t been kind to mortgage originators. Ultralow mortgage rates spurred a home buying and refinance boom in the early years of the Covid-19 pandemic. In reference to layoffs, a spokesperson said in an emailed statement that “while the cuts we made were difficult, we acted early and made decisions that were prudent for the long term growth of the business.”
The delay in closing the deal required Aurora to ask shareholders for permission to extend its deadline in February. The SPAC also gave them the option to redeem their stock for a proportionate share of the SPAC’s cash. About 93% of shareholders did so, leaving Aurora with less than $21 million in its trust account—and 97% of remaining shares held by management.
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