UWM shares plunge 49% after dividend suspension and $452 million loss

The Story in Brief

United Wholesale Mortgage shares fell as much as 49% on Thursday, their steepest decline since the company went public in 2021. The US mortgage lender reported a $452 million net loss and suspended its quarterly 10-cent dividend. Its shares were down 40% later in the session and have fallen 75% this year as weaker housing demand hits new mortgage activity.

UWM also announced a $2.05 billion capital investment from Oaktree Capital Management and a vehicle owned by chief executive Mat Ishbia and his family. Oaktree and Ishbia will provide $1.65 billion initially, while a planned $400 million rights offering will seek funds from shareholders. Oaktree will receive preferred shares and warrants. The company’s earlier attempt to buy Two Harbors Investment Corp. failed after shareholders accepted another offer.

The Indian Opinion

The easy story is that UWM’s dividend halt alone caused the collapse, or that the capital deal guarantees a rescue. Neither is sufficient. The loss, weak mortgage market and failed Two Harbors bid all matter, while Oaktree’s preferred securities carry a base annual dividend of at least 10% and possible board control. Shareholders should judge the turnaround by cash generation and mortgage volumes, not assurances. Can UWM stop losses before the rights offering is completed?

Source: livemint.com

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