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Offerpad, among the largest iBuyers still operating following the shuttering of Zillow Offers last year and RedfinNow earlier this month, received a warning Tuesday from the New York Stock Exchange that its plummeting share price could result in being delisted from the world’s largest stock exchange.
In a statement Friday the company confirmed it had received a notice of non-compliance from the the exchange, indicating the iBuyer was in violation of a requirement that listed stocks remain above $1 a share.
Offerpad’s stock has not been above $1.00 a share since Oct. 26. Companies whose share price dips below $1 for longer than 30 trading days can potentially be delisted, though delisting is not automatic.
Companies that are booted from a major stock exchange can still sell shares, but those shares are then traded on an over-the-counter market. Such markets may be less accessible to some traders, and are also populated in part by companies perceived as less established or stable.
More significantly, investors often treat delisting as a sign that a company is in serious financial trouble and possibly headed toward bankruptcy. Such a stigma can further sap investor interest in the company and exacerbate the problems that led to delisting in the first place. Though technically possible, few delisted companies later rejoin the markets that kicked them out.
In its release, Offerpad executives said they intend to reverse declines in share prices and return to compliance with the NYSE, adding that they were currently considering multiple options, including a reverse stock split upon approval by investors.
The company will be considered in compliance with the NYSE if its stock is trading above $1.00 per share for over a 30 trading-day period at any point over the following six months.
Offerpad’s stock has declined steadily since debuting on the stock market last year with a $2.7 billion valuation. It reached a high of more than $13 per share in September 2021, and sat at $0.66 on Monday morning.
Offerpad’s loss of compliance with the NYSE comes as the company ended its three-quarter profitability streak per its most recent earnings report, and posted a net loss of $80 million for the quarter — a huge jump from the third quarter of 2021 when it lost only $15.3 million.
The company, whose business model is structured around buying homes directly from sellers, making light renovations, and then flipping the properties, has seen business decline sharply as high mortgage rates scare off home buyers, and home prices fall in some markets.
iBuyers have struggled even before the market downturn, with Zillow shutting down its iBuying arm in 2021. Redfin shut down its iBuyer RedfinNow on Nov. 9 and slacked 13 percent of its staff at the same time.
In Offerpad’s case, the company bought 1,847 homes in the third-quarter of 2022, down 33 percent from third-quarter 2021. It held homes for an average of 97 days from acquisition to sale during the third quarter, below its 100-day target. It sold 2,280 homes in the third quarter, up 36 percent from the same quarter a year ago.
The company said it will focus on selling the remaining homes it acquired before the downturn and focus less on acquiring homes.
“We continue to navigate through this period of market dislocation,” Offerpad CFO Mike Burnett said in a Nov. 2 statement, “by appropriately managing down our inventory levels and strategically acquiring homes that reflect current conditions.”