Sonder and Vacasa face potential Nasdaq delistings
US: Property management companies Sonder and Vacasa, who have both gone public via mergers with special purpose acquisition companies [SPACs] in the last 20 months, have each received notice from the Nasdaq Stock Market that they are not in compliance with a minimum bid price obligation and that they face being delisted within the next 180 calendar days if they do not comply.
Sonder was the first of the two companies to receive the notice on 21 April that it was not in compliance with Nasdaq regulations as the company’s common stock had fallen below $1.00 per share for 30 consecutive business days. There was to be no immediate effect on its listing or trading on The Nasdaq Global Select Market but Sonder was granted 180 calendar days – or until 18 October 2023 – to regain compliance, i.e. its common stock must be at least $1.00 per share for a minimum of ten consecutive business days during the 180-day grace period.
Should Sonder not regain compliance with the minimum bid price requirement within the grace period, the firm may be eligible to apply for an additional 180-day compliance period if it elects to transfer to The Nasdaq Capital Market and it meets the necessary listing requirements. If Sonder does not regain compliance, is not eligible for transfer, and its common stock has a closing bid price of $0.10 or less for 10 consecutive trading days during the compliance period, Nasdaq will notify the company that its securities will be subject to delisting.
In March, Sonder announced that it was making around 100 corporate employees redundant, amounting to close to 14 per cent of the startup’s overall workforce, following two previous extensive rounds of layoffs in June 2022 and March 2020. The San Francisco-based firm debuted on the public markets in between then in January 2022 after closing a delayed business combination with special purpose acquisition company [SPAC] Gores Metropoulos II, and now trades on the Nasdaq Global Select Market under the ticker symbols “SOND” and “SONDW” respectively.
At the time, Sonder has raised approximately $310 million in PIPE [private investment in public equity] capital and was valued at $1.925 billion, which was downgraded from the initial $2.2 billion expected valuation.
After going public in January 2022, Sonder’s share price initially shot up to a high of $10.11 but that has plummeted and steadily fallen since, hitting a low of $0.42 at the start of this month.
Vacasa received the equivalent notice of delisting from Nasdaq a matter of days after Sonder for the same reasons – i.e. failing to satisfy the minimum bid price listing requirements set out for common stock. The Portland-based firm was also granted the same 180-calendar day grace period [this time until 24 October 2023] to regain compliance with the Nasdaq requirement.
Vacasa’s fortunes since going public via a SPAC merger in December 2021 are very similar to those of Sonder. While its share price initially fluctuated after the news of the SPAC merger with TPG Pace Solutions became public, it recovered to a high of $9.22 in late March 2022 before a sharp decline to its latest price of $0.77.
In less than a year, the company has gone through three substantial layoff rounds, with 25 jobs cut in its sales department last July, around 280 redundancies in October, and a job reduction of 1300 positions [17 per cent of Vacasa’s then-workforce] in January of this year.
At the same time, there has been mass upheaval at boardroom level, with Rob Greyber succeeding Matt Roberts as CEO back in August, the engagement of an observer [Rachel Gonzalez] to serve on Vacasa’s board of directors in October, and key figures Craig Smith and Jeff Flitton stepping down from their respective key CCO and CTO roles in February.
Ahead of announcing its first quarter 2023 financial results next Tuesday [9 May], Vacasa CFO Jamie Cohen hinted that more homeowner churn could be on the horizon as the number of homes under management looks set to decline further due to sales forcer reductions and a shift towards more of an individual home acquisition strategy.
Despite recording a net loss of $302 million in Q4 2022, however, Vacasa exceeded expectations when it came to revenue, achieving a 14 per cent year-over-year increase to $218 million.