Selina shares down over 96% from IPO price after single-day 41% plunge
The Israeli-founded hospitality company currently has a market cap of just $46 million, a far cry from the $1.2 billion valuation at which it went public last October
Hospitality company Selina saw its shares fall another 41% on Friday, meaning it has now lost over 96% of its valuation since going public last October. The drop came following the news that another 8.6 million shares could be hitting the market soon, should existing shareholders choose to sell them.
As of the end of March, the company's cash balance was a mere $23 million. In June, Selina announced substantial cost-cutting measures, including the layoff of approximately 350 employees, the closure of several properties, and a near-complete suspension of new hotel openings. These actions were aimed at mitigating the cash drain, which led to a substantial loss of $200 million despite generating $183 million in revenue in 2022.
Selina, founded in 2015 by Rafael Museri and Daniel Rudasevski, went public in October through a SPAC merger at a valuation of $1.2 billion, raising $54 million. However, the company's market cap currently hovers around just $46 million.
After the last round of layoffs, Selina retained approximately 2,000 employees, consolidating its headquarters from eight different offices into one, with some employees working remotely. This cost-cutting plan is projected to result in $5.8 million in savings starting from the second quarter of 2023, alongside a one-time expenditure of $1 million for severance payments.
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In the first quarter of 2023, Selina reported revenues of $54.2 million, representing a 32% increase compared to the same quarter last year and a slight increase compared to the previous quarter. Excluding the new hotels, revenues increased by 18%. The occupancy rate rose to 57% compared to 45% in the corresponding period last year. However, the company still incurred a total loss of $30.3 million, although it improved from $38.3 million in the previous year's quarter.
Simultaneously, Selina announced a funding agreement with Global University Systems (GUS), a remote learning platform operator, to raise a total of $50 million. In the initial stage, Selina will receive $10 million from GUS. If Selina successfully secures an additional $20 million from other investors, GUS will provide an additional $20 million. The fundraising will involve privately issued shares at a 10% discount on the market price and convertible bonds. Furthermore, Selina drew $10 million from a credit line of $50 million in late May and restructured the repayment of a loan it acquired for expansion in South America when it was still a private company. As part of the restructuring, the debt was converted into Selina shares.
