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Digital title and closing provider Doma is the latest real estate tech company to execute a reverse stock split in the hopes of heading off delisting from the New York Stock Exchange after seeing its share price slip below the $1 minimum last summer.
Shares in Doma, which were trading for as little as 17 cents on Monday, climbed above $5 Friday after every 25 shares of the company’s outstanding common stock were converted into a single share overnight. Doma will be back in the exchange’s good graces if its share price remains above $1 for the next 30 trading days.
The 1-for-25 reverse stock split was unanimously approved by the company’s board of directors, Doma said in an announcement. Stockholders had previously authorized the board to conduct a reverse split in the range of 1-for-10 to 1-for-50 at the company’s June 8 annual meeting.
The New York Stock Exchange warned Doma in August, after the company’s share price slipped below $1, that the company would no longer qualify to be traded on the exchange if shares did not climb back above that threshold within six months.
Although reverse stock splits generally affect all stockholders uniformly and don’t change the share of their stake in the company, they can have an impact on investor sentiment.
Doma’s share price after reverse split
Source: Yahoo Finance
While Doma’s share price touched a high of $5.43 in afternoon trading after the reverse split was executed, it gave up some of those gains to close at $4.94. After adjusting for the impact of the reverse split, shareholders saw the value of their shares in the company decline in June. At Doma’s closing price of 30 cents on June 1, 25 shares in Doma would now be worth $7.50.
Shares in struggling iBuyer Offerpad have performed well since the company executed a 1-for-15 reverse stock split on June 13 to allow the company to maintain its place on New York Stock Exchange. Shares in Offerpad are up about 70 percent since the reverse split was executed, climbing from $7.82 to above $13, with much of those gains realized in the past week.
While companies that are delisted from the New York Stock Exchange or other exchanges can still be traded as over-the-counter (OTC) “pink sheet” listings, investors tend to have more confidence in companies that trade on the major stock exchanges.
“If the NYSE were to delist the common stock for any reason, it would negatively impact our reputation and, as a consequence, our business, and would likely decrease the liquidity and market price of our common stock,” Doma’s board said in recommending that shareholders approve a reverse stock split. Delisting would also be likely to make it harder for Doma to raise money and provide stock incentives to employees, investors were told in April.
Founded in 2016, Doma has developed a machine learning platform, Doma Intelligence, and other technology to automate the title and escrow processes.
After raising less than anticipated when it went public in a 2021 merger with a special purpose acquisition company (SPAC), Doma last year saw rising mortgage rates dramatically curtail its clients’ mortgage refinancing volume.
As it adapts its technology to handle purchase mortgages, Doma continues to rack up losses, with a $42.1 million first-quarter loss adding to an accumulated deficit of $536.9 million through March 31.
Last month, Doma announced it had sold 22 retail title locations and operations centers in California to title insurer Williston Financial Group (WFG). Doma said it will receive up to $24.5 million for the sale of those assets in northern and central California, including up to $14 million in earnouts next year “based on the retention of specified employees.”
In three rounds of layoffs last year, Doma cut its workforce by 52 percent, eliminating 1,076 positions across the company to finish the year with 1,062 employees.
On a May 9 earnings call, Doma founder and CEO Max Simkoff said the company reduced its branch footprint by 13 percent during the first quarter as it finalized a “transformative core strategy for the business” to harness the company’s instant underwriting technology through external partnerships.
Editor’s note: This story was updated after publication to correct that Doma stands to receive up to $24.5 million for the sale of assets in northern and central California to Williston Financial Group. That sum includes up to $14 million in earnouts. The story was also updated to note Doma’s closing share price of $4.94 on Friday, June 30.
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