loanDepot’s operating turnaround may be gaining traction, but its stock price tells a less convincing story.
The New York Stock Exchange notified the lender Friday, Aug. 21, that it had fallen out of compliance with the exchange’s continued-listing standards after the average closing price of its Class A common stock remained below $1 for 30 consecutive trading days as of Aug. 20.
The notice does not immediately affect loanDepot’s NYSE listing, business operations, or Securities and Exchange Commission reporting requirements, the company said. Its shares will continue trading during the cure period.
loanDepot generally has six months from receipt of the notice to bring both its closing share price and 30-day average closing price back above $1. The company said it plans to notify the NYSE within 10 business days that it intends to cure the deficiency.
If loanDepot does not regain compliance within the permitted period, its shares could become subject to suspension and delisting proceedings.
The company said it could pursue a reverse stock split, subject to shareholder approval no later than its next annual meeting, anticipated in early June 2027.
loanDepot shares closed Friday at 89.25 cents, leaving the stock nearly 11% below the NYSE’s $1 threshold.
Hsieh Points To Operating Gains
Founder and CEO Anthony Hsieh used the compliance announcement to emphasize the company’s recent operating progress.
“In the last quarter, unit volume grew by 25%, revenue grew by 18%, and purchase market share grew by 33%,” Hsieh said. “We executed a successful and strategic expansion into home equity lending, at scale, and re-entered the wholesale market.”
“We are making more loans, making them faster, and producing them at a lower cost,” he continued. “As we do that, we expect our stock price to reflect our success.”
Those improvements are real, but they require context.
loanDepot’s second-quarter earnings show funded loan units increased 25% from the first quarter, while origination dollar volume rose only 4%, from $7.66 billion to $7.99 billion.
The difference largely reflected increased production of smaller-balance home equity loans through loanDepot’s 5X5 HomeLoan product. Hsieh said those loans carry higher revenue and gain-on-sale margins while costing less to produce than larger first mortgages.
That product shift improved loanDepot’s production economics. Its pull-through-weighted gain-on-sale margin increased to 345 basis points from 271 basis points in the first quarter, while origination income rose 60% to $52.2 million.
Purchase production also climbed. Purchase mortgages represented 57% of second-quarter originations, up from 41% in the first quarter. Based on the company’s reported totals, purchase volume increased approximately 44% to $4.56 billion from $3.16 billion.
But the operating gains have not yet produced sustained profitability.
Investors Have Yet To Price In The Turnaround
loanDepot reduced its consolidated net loss to $6.6 million in the second quarter, down sharply from $54.9 million in the first quarter and $25.3 million one year earlier.
Part of that improvement came from changes in the value of loanDepot’s mortgage servicing rights and related hedges. On an adjusted basis, the company lost $29.2 million, compared with $33.6 million in the first quarter and $16 million during the second quarter of 2025.
Adjusted EBITDA increased sequentially to $20.5 million from $14.3 million but remained below the $25.6 million recorded one year earlier.
Liquidity and debt obligations also remain part of the valuation question. Cash and cash equivalents declined by $48.3 million during the second quarter to $229.1 million, down from $408.6 million one year earlier.
loanDepot repurchased $16 million of senior notes during the quarter at an average of 90% of par and another $27 million through July 30 at an average of 86% of par. Management said addressing its upcoming bond maturities remains a priority.
The lender also agreed to sell approximately $10 billion in mortgage servicing rights after the quarter ended. It has not disclosed the expected proceeds from the transaction.
Third-quarter guidance does not point to a major production surge. loanDepot expects to originate between $6.25 billion and $8.25 billion, placing the $7.25 billion midpoint below its second-quarter volume.
Management instead expects further progress toward profitability to come from wider margins, a more profitable product mix, and lower expenses.
A Reverse Split Would Fix The Price, Not The Valuation
A reverse stock split would reduce the number of shares outstanding while proportionally increasing the price of each remaining share. It could return loanDepot’s stock price to compliance with the NYSE standard, but it would not by itself increase the company’s total equity value or improve its underlying operations.
That distinction matters because loanDepot’s depressed stock price has already drawn outside scrutiny.
In July, activist investor Randian Capital called on loanDepot to explore strategic alternatives, arguing that its mortgage servicing portfolio could be worth more to a strategic buyer than public investors were assigning to the company. loanDepot has not announced a strategic review.
The compliance notice also comes as loanDepot pursues growth across more lending channels. The company returned to wholesale lending in March, although management has since characterized wholesale as a supporting business rather than a primary growth engine.
That return makes the company’s financial position relevant beyond its shareholders. loanDepot is once again competing for broker-generated loans while investing in retail, direct-to-consumer, home equity, builder-affiliated lending, and servicing.
loanDepot has increased production, moved deeper into home equity lending, improved margins, and brought its headline loss close to break-even. The NYSE notice underscores the remaining challenge: convincing investors that those gains can translate into sustainable profitability, sufficient liquidity, and a stronger long-term valuation.
