Skift Take

That Sonder's business has been struggling is not news, but a potential delisting of the stock could be a warning sign for other struggling companies in the industry that went public prematurely.

Property manager Sonder, received a notice of delisting from Nasdaq because the company failed to satisfy the minimum bid price listing rule as its common stock traded below $1.00 per share for 30 consecutive business days. 

Sonder now has a grace period of 180 calendar days (until October 18, 2023) to regain compliance with the minimum bid price requirement — where the closing bid price of its common stock should be at least $1.00 per share for at least 10 consecutive business days during this grace period. 

It has another option that makes Sonder eligible for an additional 180 calendar day compliance period: If it elects to transfer to the Nasdaq Capital Market. To qualify, Sonder would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for the Nasdaq Capital Market, with the exception of the minimum bid price requirement, and would need to provide written notice of its intention to cure the bid price deficiency during the second compliance period.

The protracted struggle of Sonder has been making news for some time now. Founded in San Francisco in 2012, Sonder touted itself as “a leading next-generation hospitality company that is redefining the guest experience through technology and design.”

But today it is a case study of companies that went public prematurely, some would argue, through a special purpose acquisition company merger. Sonder debuted on Nasdaq in January 2022 at $8.95 per share.

In March, Sonder laid off 14 percent of its corporate workforce — its second round of layoffs after cutting 21 percent of its corporate staff and 7 percent of workers in local roles in June last year. 

“For the first quarter of 2023, we expect revenue of better than $110 million representing 37 percent year-over-year growth,” Sonder’s chief accounting officer Christopher Berry said during the company’s fourth quarter earnings — reiterating the company’s commitment to achieving positive free cash flow in 2023. Not only did it retreat from that pledge, it failed to provide guidance to shareholders beyond the first quarter that ended March 31. 

“Travel companies which went public through a SPAC in 2020 and 2021 were certainly capitalising on a strong bull market, huge pent-up consumer demand for travel – particularly for short term rentals – as well as ample amounts of interest from private equity companies which were sitting on a lot of dry powder for opportunistic investments,” Pranavi Agarwal, senior research analyst at Skift Research said earlier. “However, with 2022 and 2023 seeing record high inflation, rising interest rates and a looming recession, many of the travel SPACs have struggled to prop up their stock price and we have seen several companies such as Vacasa, Sonder and Inspirato dial back their profitability guidance and slash their workforce in attempts to save costs and prevent plummeting profits,” she said.

In the fourth quarter of 2022, Sonder notched a net loss of $54.8 million compared with $77.3 million loss a year earlier. 


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Tags: hotels, mergers, nasdaq, sonder, spacs

Photo credit: A one-bedroom available to travelers from Sonder, a hospitality startup that offers lodging via Hotel Engine, a startup that has received funding. Source: Sonder.

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