Share prices for the mortgage lender Better.com tanked Thursday, hours after the company went public and nearly two years after CEO Vishal Garg unceremoniously laid off hundreds of employees via Zoom. By Friday morning, shares were trading at a more than 90 percent discount.
The crash was not entirely unexpected for Better, which built its business on lightning-fast home loans during the millennial home-buying spree that was the coronavirus pandemic. When the company first eyed going public in a SPAC merger with Aurora Acquisition Corp in 2021, it was valued at an eye-watering $7.7 billion. (The more than 90 percent stock price decrease is from where Aurora was trading at close on Wednesday, at more than $17 a share. Shares in the merged company, Better Home and Finance, debuted at $1.98 per share before dropping to $1.19 at close Friday.)
In recent years, as mortgage rates skyrocketed and the housing market slowed, Better’s business has declined precipitously. According to SEC filings, the company lost $89 million in the first quarter of 2023 and more than $1 billion in the last two years combined. It also reported axing 91 percent of its staff in the last 18 months.
It didn’t help matters that Garg, 55, was making national headlines for his behavior toward staff. On top of the aforementioned Zoom layoffs, during which he congratulated himself for not crying, Garg also called his employees “dumb dolphins,” said they were “embarrassing” him, and referred to a major investor as “sewage.” In an incident exclusively reported by The Daily Beast last year, Garg brought an ax into the office as a gift for an executive who had laid off a number of employees.
“We have not really been actively supporting the company since [he fired workers on Zoom],” one investor told Forbes this week. “It’s not an investment I’m thrilled about making.”
Garg appears to have been on an apology tour of late, telling TechCrunch earlier this week that he had been through “a lot of leadership training” and was working “really, really hard to change the way that I show up to the team every day, and to be more empathetic and to treat them with the same level of kindness that I showed our customers.” In a line that definitely was not crafted beforehand by a PR team, he added: “I think I’ve learned now that in order for our customers to be delighted, our teammates also have to feel delight.”
The merger with Aurora was supposed to relieve some of these woes, unlocking $528 million in funding from SoftBank and allowing it to change its name from the scandal-scarred Better.com. In a statement to TechCrunch, Aurora CEO Arnaud Massenet said he believed the merger would “deliver long-term value for our shareholders” and that he “look[s] forward to being part of the next stage of this journey.”
But Better has other issues lurking in the wings. The U.S. Securities and Exchange Commission opened an investigation into the company last year based on a lawsuit filed by an outgoing executive who claimed Better misled investors about the company’s financial outlook. (Attorneys for the company have called the suit a “baseless” attempt to “extract unearned compensation” and filed a motion to dismiss.) The commission declined to bring an enforcement action against the company this month, but said in a statement that that decision should “in no way be construed as indicating that the party has been exonerated.”
Garg, meanwhile, is facing his own share of lawsuits from former business partners who claim he misappropriated their money or swindled them out of millions, including one whom he threatened in a deposition to “staple … against a fucking wall and burn … alive,” according to Forbes. (Garg did not respond to a call seeking comment.)
Against the odds, however, Garg appears positive, telling Insider this week that he believes his company will succeed on the backs of the others that fail. “There are 4,000 mortgage companies that are struggling out there today,” he said. “Some of them will throw in the towel.”