Offerpad Shares Plunge on Plan for $100 Million Stock Sale
Move erases a large portion of Thursday's 85% rally, which was fueled by optimism over potential interest rate cuts.
Shares of Offerpad Solutions (OPAD) plunged more than 26% in after-hours trading on Thursday after the real estate technology company announced plans to sell up to $100 million in stock. The move abruptly halted a massive rally that had sent the stock soaring over 85% during the regular session.
The company unveiled an at-the-market sale agreement with Jefferies, allowing it to sell shares from time to time. According to a statement, the proceeds are intended for general corporate purposes, including working capital and capital expenditures. The announcement came shortly after the market close, where Offerpad's stock finished the day at $6.23.
The subsequent after-hours sell-off saw the price tumble to around $4.57, erasing a significant chunk of the day's gains. The earlier surge was largely attributed to growing optimism among investors for potential Federal Reserve interest rate cuts. Lower rates are seen as a significant benefit for iBuyer companies like Offerpad and its competitor Opendoor (OPEN), whose business models are highly sensitive to housing market activity and mortgage affordability.
Offerpad's stock has been on a volatile run, surging over 310% in the last two months in a rally that has mirrored the momentum of Opendoor and captured the attention of retail investors. Even after the after-hours drop, Offerpad's shares remain up over 100% year-to-date.
However, the company's decision to raise capital appears to have tempered the recent investor enthusiasm. Despite the stock's dramatic recent performance, all four brokerage analysts covering Offerpad rate it as a "hold," with a median price target of just $1.15, according to data compiled by LSEG. The planned stock sale highlights the disconnect between the stock's recent market frenzy and its underlying financial strategy.