BETR: A Shareholder Fight Is Not an Earnings Story

In the middle of a battle to push out its founder, Better Home & Finance got a shareholder announcement worth reading closely. On August 19, private investor Anthony Bobulinski, through Global Investment Ventures, disclosed a 4.7% stake in the AI-native mortgage lender: 624,198 Class A shares purchased for about $12 million, or roughly $19 apiece. The stock had rallied nearly 19% over the prior five sessions as the fight escalated, then gave back about 5% in the most recent one. It sits near $13.85, below where that investor paid.

Treat the disclosure as what it is: a stake in a control fight, not a vote of confidence in the income statement. This is the self-described first AI-native mortgage platform, which says it has funded more than $110 billion in loans since 2016 — and it is currently burning through its cash while its ousted founder and its board sue each other.

The announcement is a control bid, not a conviction call

The sequence matters more than the headline. Better's board removed founder and former CEO Vishal Garg on August 3. By August 13 he was soliciting written consents to remove five of the eight directors and campaign for his return. His group's amended 13D filed August 17 disclosed 118,260 Class A shares plus 1.91 million Class B shares, and put the group at roughly 13.7% of the outstanding voting stock, including exercisable options.

Now the share count undercounts the vote. Better’s Class A shares carry one vote and Class B shares carry three. Of the group's roughly two million disclosed shares, about 1.9 million are Class B — nearly half of the 4.35 million Class B shares Better's own June proxy counted as eligible to vote. Weighted that way, a group at roughly 13.7% of the share count controls a bit more than a fifth of the votes. That is the super-voting leverage the board named when it moved.

Better's answer was not subtle. On August 18 it filed a 136-page federal lawsuit accusing Garg of running an "illegal, scorched-earth campaign," violating the securities-law disclosure rules, and coordinating with an undisclosed group — naming Bobulinski among the alleged members. Two days later the Special Committee adopted a poison pill that triggers at any 15% ownership of a class or 15% of voting power, with today, August 31, as the record date and an expiration at the 2027 annual meeting. Garg answered on August 25 with a Delaware Chancery suit over the pill.

Then the fight broke toward shareholders. On August 28, Judge Margaret Garnett denied Better’s request to block Garg’s solicitation, finding the company had not shown irreparable harm and that shareholders had enough public information to decide for themselves. The company can't litigate this away; the votes decide. One affiliated filing even sketched a possible group of 26.8% of shares before disclaiming that a formal group existed — so part of what's being fought over is not just the board, but what anyone actually owns.

The business is improving; the checkbook is not

Read the second quarter without the noise and the operating trend is real. Loan volume grew 38% year over year to $1.67 billion. Net revenue grew 28% to $54.7 million. The net loss narrowed to $30.6 million, and adjusted EBITDA loss improved to $14 million — though that last figure includes a $6.5 million one-time reserve release, so the core progress is less flattering. Interim CEO Daniel Lewis took over August 3, and the company raised its annualized cost-reduction target to more than $45 million.

The forward number is where the case stalls. Wall Street expected a smaller loss, and the shares fell about 6% on the August 6 report. Better then pulled its September adjusted-EBITDA break-even target and guided Q3 to a loss of $15 million to $18 million on revenue of $49 million to $52 million — a wider loss and lower revenue than it just printed. At that guided pace the company burns roughly $60 million to $70 million of adjusted EBITDA a year. Against the $102 million of cash on hand at the end of Q2, that is about a year and a half before losses alone eat the balance sheet, and this year's operating cash flow has run worse than adjusted EBITDA.

The balance sheet is mortgage-industry normal on the surface — warehouse lines secured by loans — but the leverage is real. Booked equity is only about $58 million against roughly $1.5 billion of gross debt, and a governance fight that spooks warehouse lenders is a financing risk, not just a boardroom one. The stock sells near 1.4x trailing sales — not expensive against a 38% quarterly loan-volume gain, but with negative earnings there is no forward multiple to hang the growth on.

What each outcome is worth

Garg's program is a classic unlock-the-value agenda: remove the five directors, repurchase up to $30 million of stock — about 29% of the cash balance — sell the U.K. banking arm, keep cutting costs, and work for $1 until profitable. The board's counter is that he is the reason the losses exist. Its Special Committee letter cites more than $2 billion in cumulative net losses since 2021, a 2023 revenue plan that targeted $5 billion and produced $72 million, and a loss of more than 90% of the company's public value on his watch. Better separately points to a prior jury verdict against Garg for breach of fiduciary duty and conversion.

Notice the agreement hiding inside the fight: both sides want the same cost cuts, both want the same U.K. sale, and both talk as if $30 million of buybacks could fix a $263 million problem. What neither side has shown is a single quarter of positive earnings. The only near-term upside path is a re-rating on control — a buyback, a strategic sale, or a cost plan a credible CEO actually sticks to — none of which is guaranteed, and all of which now run through two courts and a poison pill that blocks any stealth accumulation above 15% until the 2027 annual meeting.

The bottom line

For once, the market is not the side making the mistake. It has priced BETR as an unresolved control dispute attached to a negative income statement, because that is exactly what it is. A major shareholder announcement is normally a reason to check the math; here the announcement is the market's entire problem — a 4.7% position parked at about $19, a group at 13.7% and just under the 15% trigger, a consent vote in progress, and no positive-EPS quarter to value. The vote outcome, the cash balance, and a quarter where adjusted EBITDA turns positive are the only checklist that matters. Until one of those moves, the announcement changes nothing about the math — and there is no edge in a fight two losing sides are both paying lawyers to win.