The ongoing market turmoil related to GameStop and other Redditor-favored stocks may have contributed to the sharp decline in both the size and expected price of Home Point Capital's initial public offering.
After the market closed on Jan. 28, Home Point valued an offer of 7.25 million shares (along with an option to subscribe to 1.0875 million shares) at $ 13 per share, far from the 12.5 million shares (plus 1.875 million stock insurers). Option) and the expected range of $ 19-21.
After the stock started trading, the price fell to a low of $ 9.05 per share. It has since bounced back and stood at $ 10.58 by noon.
While that means three for three of the recent IPOs by non-bank mortgage lenders to shrink their size, Home Point's cut is a lot bigger than the Rocket Cos difference. And Guild Holdings.
United Wholesale Mortgage went public on January 22, through a merger with a special purpose vehicle, and therefore adopted the price at which Gores Holdings IV was trading prior to the close of the deal.
Unlike its predecessors, Home Point went public at the end of a week when retail investors, largely boosted by a Reddit group, drove GameStop stock to astronomical highs and confused institutional investors who cut that stock. Other stocks reportedly involved in the short squeeze include shopping malls that own real estate investment trusts like Macerich and Tanger Factory Outlets.
If Home Point's subscription option is exercised, gross proceeds to the Company's selling shareholders – primarily Stone Point Capital affiliates – will be $ 108.4 million instead of the expected $ 301 million.
"We felt it was very important to us and to the mortgage industry that Homepoint (the branding of the mortgage subsidiary) take this first step to go public," said Maria Fregosi, the company's chief investment officer, in a statement. "We wanted to make sure we had a successful offer. So we adjusted the offer size to a reasonable level and achieved our main goal of entering the public market."
As Rocket Cos. Going public, it offered 100 million shares at a price of $ 18, compared to 150 million shares in a range of $ 20 to $ 22. The Guild IPO was ultimately valued at $ 15 per share for 6.5 million shares, instead of between $ 17 and $ 19 for 8.5 million shares.
Warming up in the bullpen is LoanDepot, which on Jan. 27 updated its registration notice for an offering of 15 million shares plus the option to subscribe for 5.59 million shares with an estimated price of between $ 19 and $ 21.
Additionally, both AmeriHome and Caliber Home Loans, which have suspended their respective IPOs prior to pricing due to market conditions, updated their respective registration statements in January to indicate that they each plan to go public at some point. However, none of the updates included an expected number of stocks on offer and a price range.