Shares of La Rosa Holdings, which offers brokerage and related services in the real estate sector, soared by more than 75%. The company decided to cancel its additional stock issue, which aimed to sell up to 19% of its increased authorized capital.
Details
La Rosa’s shares surged by 75.9% to $1.17 per share at the close of trading on Friday, June 14. During the trading day, the shares reached over $1.80, marking a 170% increase. However, the current stock price is still 22% lower than at the beginning of the year.
Why the shares jumped
On Friday, La Rosa submitted a statement to the U.S. Securities and Exchange Commission (SEC) announcing the cancellation of the previously planned additional stock issue. La Rosa stated that the decision to cancel the additional issue was in the best interest of the company and its investors.
Context
It took La Rosa just three days to change its mind about the additional stock issue. On June 11, the company filed a registration statement with the SEC for the issuance of new shares. La Rosa planned to offer investors 3.6 million units, each consisting of one common share and one five-year warrant. The share price was set at $1.10 (the closing price on June 10), and the warrant price was $1.21 (a 10% premium to the June 10 closing price).
It was anticipated that following the additional issue, 18.77 million La Rosa shares would be traded on the exchange (excluding the underwriter’s option). This means the company planned to offer investors up to 19% of the increased authorized capital and raise approximately $3.24 million from the placement, after deducting all commissions and assuming the underwriter exercised the option.
As of June 11, 74% of La Rosa’s capital was owned by the company’s founder, Joseph La Rosa.
After the announcement of the additional stock issue, La Rosa’s shares initially rose in pre-market trading on June 12, but then fell—nearly 28% compared to the previous day’s closing price.
What La Rosa does
La Rosa is a broker in residential and commercial real estate, also offering related services such as mortgage and insurance processing, and property management. The company operates 21 proprietary offices, 16 franchise offices, and two subsidiaries. In the first quarter of 2024, its revenue increased by 117% to $13.1 million, the company reported. La Rosa associates future growth with organic sales as well as expansion within the U.S. and internationally, as discussed at the 14th annual LD Micro conference held in New York in early April.
