Doma, a digital title and closing provider in the real estate tech industry, has executed a reverse stock split in an effort to maintain its listing on the New York Stock Exchange (NYSE). The move comes after Doma’s share price fell below the required minimum of $1 last summer. By converting every 25 shares into a single share overnight, Doma’s share price rose above $5, potentially allowing the company to meet the NYSE’s listing requirements if it remains above $1 for the next 30 trading days.
The decision to conduct a 1-for-25 reverse stock split was unanimously approved by Doma’s board of directors, following authorization from stockholders at the company’s annual meeting in June. The NYSE had warned Doma in August that it would be delisted if its share price did not climb back above $1 within six months.
While reverse stock splits typically don’t change shareholders’ stake in the company, they can have an impact on investor sentiment. After the reverse split, Doma’s share price reached a high of $5.43 during afternoon trading but closed at $4.94, meaning shareholders saw a decline in the value of their shares. At Doma’s closing price of 30 cents on June 1, 25 shares in Doma would now be worth $7.50.
Similar to Doma, struggling iBuyer Offerpad also executed a reverse stock split earlier this year to maintain its listing on the NYSE. Since the split, Offerpad’s shares have performed well, with a 70 percent increase since June 13.
Being delisted from major stock exchanges like the NYSE can negatively impact a company’s reputation, liquidity, and market price. It can also make it more difficult for the company to raise funds and offer stock incentives to employees. Doma’s board of directors expressed concerns about potential delisting and its impact on the company’s business and stakeholders.
Founded in 2016, Doma has developed a machine learning platform called Doma Intelligence, which automates the title and escrow processes in the real estate industry. However, the company faced challenges last year when rising mortgage rates led to a significant decline in its clients’ mortgage refinancing volume. Despite adapting its technology to handle purchase mortgages, Doma has continued to experience losses, with a first-quarter loss of $42.1 million and an accumulated deficit of $536.9 million as of March 31.
In an effort to streamline its operations, Doma recently sold 22 retail title locations and operations centers in California to title insurer Williston Financial Group. The sale is expected to generate up to $24.5 million, along with additional earnouts next year based on employee retention.
Doma has also undergone significant workforce reductions, laying off 1,076 employees across the company in three rounds of layoffs last year. CEO Max Simkoff stated that the company has reduced its branch footprint by 13 percent during the first quarter as part of its core strategy to leverage instant underwriting technology through external partnerships.
Despite the challenges Doma has faced, the company remains focused on finding ways to improve its financial standing and maintain its position on the NYSE. The reverse stock split is just one step in this effort, and Doma will need continued market stability to regain and sustain compliance with the NYSE listing requirements.
