Real estate broker La Rosa Holdings sees stock plummet after issuing new shares
Shares of La Rosa Holdings, a provider of real estate brokerage and related services, plunged almost 12% in trading on Monday, July 29. This came after the company announced that, with the consent of the majority shareholder, it had sold a promissory note worth around $0.5 million, along with shares and warrants, to an unnamed investor. Note that a previous attempt to raise capital had been called off following a negative reaction from investors.
Details
La Rosa stock dropped 11.85% on the Nasdaq on Monday, closing at $1.19 per share. The company reported that on July 16, it sold to an unnamed investor a promissory note for $468,000; 29,800 shares at market price ($46,800 on the exchange that day); and warrants worth $444,600. The transaction was approved by the company’s majority shareholder, Joseph La Rosa, and did not require any other approvals, the company stated.
Context
This is only La Rosa’s latest attempt to raise capital. On June 11, the company filed a registration statement with the U.S. Securities and Exchange Commission (SEC), intending to offer investors 3.6 million units, each consisting of one common share and one five-year warrant, priced at $1.10 per share and $1.21 per warrant.
The day after announcing this, La Rosa’s stock plummeted almost 28% versus the previous day’s close. Three days later, the company reconsidered: on June 14, it withdrew the registration statement, stating that the withdrawal was in the company’s best interest and protected investors.
About the company
La Rosa is a broker in the residential and commercial real estate sector, also offering related services such as mortgage and insurance processing, as well as property management. It has 21 company-owned offices, 16 franchise offices, and two subsidiaries. In the first quarter of 2024, the company’s revenue more than doubled year-over-year, rising 117% to $13.1 million. La Rosa believes its future growth will be driven by organic sales, paired with expansion both within and outside of the U.S., as mentioned at the LD Micro conference in New York this spring.
The company’s stock price has dropped about 21% since the beginning of the year and is down more than 76% over the past 12 months.
