Blend Labs, a California-based mortgage technology firm, is facing the possibility of being delisted from the New York Stock Exchange (NYSE) due to its stock price falling below $1 for over a month.
On April 28, Blend received a notice from the NYSE stating that it was not in compliance with the exchange’s bylaws, which stipulate that a company may be delisted if its common stock trades below $1.00 for more than 30 trading days. Blend has a six-month period to rectify this situation.
Currently, its stock is trading at $0.58 per share. To regain compliance, Blend must have a closing price of at least $1.00 on the last trading day of each calendar month during the cure period, along with an average closing share price of at least $1 over the 30 trading-day periods concluding on the final trading day of each respective month.
Blend Labs has expressed confidence in its ability to meet the NYSE requirements and is working closely with the exchange. The company intends to inform the NYSE of its plan to rectify the deficiency, which might involve a reverse stock split pending approval from the board of directors and stockholders, as stated in its 8-K filings.
A spokesperson mentioned that Blend will provide a formal update on its strategy to comply with the minimum share price requirements during its Q1 earnings call, scheduled for May 9. Despite its current risk of delisting, Blend had a successful initial public offering in July 2021, raising $360 million by selling 20 million shares of Class A stock at $19 each, resulting in a valuation of approximately $4.6 billion with shares closing at $20.90.
Blend successfully onboarded numerous clients, such as Wells Fargo, First Republic Bank, Mr. Cooper, and U.S. Bank, which accounted for approximately 25% of mortgages originated during the pandemic period. To adapt to the cyclical nature of the mortgage industry, Blend has been actively transitioning its business model from a mortgage-focused company to a platform-based enterprise.
Since 2019, it has been expanding into the consumer lending sector. However, the Federal Reserve’s unprecedented series of interest rate hikes had an impact, and Blend experienced significant financial losses. In 2022, the company reported a staggering loss of $796 million, with operating expenses skyrocketing to $835.8 million from $313.2 million in 2021.