UWM’s stock volatile in early trading after SPAC merger

In early trading on Friday, United Wholesale Mortgage’s stock price was on the same roller coaster ride that stocks from the two other recently launched nonbank mortgage public offerings went through.

UWM Holdings Corp.s’ opening price was $11.95 per share, according to Yahoo Finance, with a high point of $12.30 shortly afterwards. The special purpose acquisition company it merged with, Gores Holdings IV, closed Thursday afternoon at $11.54 per share.

Courtney Crow

Still, out of the myriad of nonbank mortgage lenders that announced they were going public since last summer and into 2021, UWM is just the third to actually list, joining Rocket Cos. and Guild Holdings.

But that initial enthusiasm was short-lived as the stock began trending downward and by 10 a.m. UWM Holdings already down $0.29 on the day to $11.25.

Over the next hour, UWM’s was both above and below Gores Holdings IV previous close. As of 11 a.m., all other publicly traded nonbank mortgage lenders — a group that includes Ocwen, Mr. Cooper, New Residential, Redwood Trust and Impac — were lower as part of a broader drop in the stock market. That sell-off was driven by investors reassessing the government's stimulus package, according to CNBC.

The SPAC valued UWM at approximately $16 billion. By going public in this method, rather than through an initial public offering, UWM did not have to reduce the size or the valuation of its shares during the pricing phase.

Rocket initially wanted to sell 150 million shares at between $20 and $22 each; it ended up selling 100 million at $18. Guild was looking at selling 8.5 million shares between $17 and $19 each; that ended up at 6.5 million at $15 each.

Both companies had their ups and down in their initial day of trading, with Rocket ending at $21.51 and Guild at its IPO price.

On Jan. 22, Rocket opened at $19.82, with Guild at $16.15.

“We are grateful to The Gores Group for their expertise in the SPAC process, they are the experts in these things and we’ve appreciated all of the guidance they’ve provided to get us to our listing day,” UWM President and CEO Mat Ishbia said in a press release.

In connection with the closing of the merger, UWM received approximately $925 million of gross proceeds. That is broken down into approximately $425 million in cash from Gores Holdings IV, as well as $500 million in proceeds from the previously announced private placement offering.

United Wholesale Mortgage was founded as United Shore Financial by Mat Ishbia’s father Jeffrey. After considering a career as a college basketball coach, Mat Ishbia, who was a part of Michigan State’s 2000 national championship team, returned to the family business. Following the merger with Gores Holdings IV, he has a 94% stake in UWM Holdings.

The company previously announced net earnings of $1.45 billion in the third quarter, compared with $539.5 million in the second quarter and $198 million in the third quarter of 2019.