Offerpad stockholders woke up Tuesday morning to a massive increase in the price of one of their shares, which is due to one share on Tuesday morning being equivalent to 15 shares on Monday evening.
In an attempt to save the iBuyer from being delisted from the New York Stock Exchange, Offerpad underwent a 1-for-15 reverse stock split Monday evening. The move was announced last Thursday after being approved at the Offerpad shareholder meeting earlier that day.
Offerpad went public in September 2021 at a value of $2.7 billion and received its first non-compliance notice on November 15, 2022, after the closing price of the firm’s shares fell below the required $1 average over a consecutive 30-day trading period.
The shares then went above $1 in February 2023 after the iBuyer announced a plan to raise $90 million from existing investors. However, the stock failed to maintain the minimum $1 average over 30 trading days.
Over the past 12 months, Offerpad shares have traded for as much as $3.80 and as little as 37 cents. On Monday evening, Offerpad shares were valued at 52 cents, but Tuesday morning they were worth nearly $8 a share, well above the $1 minimum.
With the 1-for-15 stock split, every 15 shares of outstanding Offerpad common stock were automatically converted into one share after the markets closed on Monday night. According to the firm, the stock split impacts all stockholders uniformly and does not alter any shareholder’s percentage interest in the company.
While there is no guarantee that this move will increase share prices, it does help the company, at least for the time being, to overcome the $1 minimum hurdle.
Offerpad’s board of directors first suggested the reverse stock split in late April in a proxy statement to investors.
“The board believes that continued listing on the [New York Stock Exchange] provides overall credibility to an investment in our stock, given the stringent listing and disclosure requirements of the NYSE,” the statement read. “Notably, some trading firms discourage investors from investing in lower-priced stocks that are traded in the over-the-counter market because they are not held to the same stringent standards.”
Offerpad has struggled as the housing market has cooled over the past year. After reporting a net income of $6.5 million in 2021, its first year as a public company, Offerpad started the following year with two profitable quarters, but things took a turn in the second half of 2022.
Despite reporting over $50 million in net income during the first six months of the year, the iBuyer reported a net loss of $148.6 million for all of 2022.
The challenges continued into 2023, with Offerpad recording a 56% annual drop in revenue to $609.6 million and a net loss of $59.4 million during the first quarter of the year.