Buy Or Sell Better Homes And Finance At $70?

Better Homes and Finance (NASDAQ: BETR) has been the talk of the market lately, surging over 160% in just a week to reach $68 per share. But before you jump on this rocket ship, let’s cut through the hype and examine what’s really driving this stock—and whether it’s sustainable.

So what really sparked this massive run-up? The surge traces back to September 22, 2025, when hedge fund manager Eric Jackson dubbed BETR “the Shopify of mortgages” and boldly predicted a 350-fold increase within two years. That’s social media influence at its finest—or most dangerous, depending on your perspective.

But can BETR actually deliver on such lofty expectations? That’s the million-dollar question. While the comparison to Shopify sounds exciting, we need to dig into the fundamentals to see if this company has the foundation to support such astronomical growth.

Before we dive into BETR’s roller-coaster fundamentals, it’s worth noting that investors seeking upside with less volatility might consider diversified approaches like the Trefis High Quality Portfolio. This portfolio has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—achieving returns exceeding 91% since inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – What’s Behind IONQ Stock’s Winning Streak?

Image by answer tenant from Pixabay

Is BETR actually growing?

Absolutely. The numbers are genuinely impressive:

• Revenue growth averaging 36.9% over three years (vs. S&P 500’s 5.3%)
• Last 12 months: revenues jumped 74.8% from $92M to $160M
• Most recent quarter: 80.6% growth to $51M

So what’s the problem with such strong growth?

Here’s where things get messy. BETR is burning cash at an alarming rate while chasing this growth. Sometimes rapid expansion comes at too high a price, and BETR appears to be paying it.

• Operating margin of -100.4% (vs. S&P 500’s +18.6%)
• Net income margin of -125.1% (vs. S&P 500’s +12.7%)
• Operating losses of $161M on $160M in revenue

See, this level of loss-making is unsustainable long-term. The company needs a clear path to profitability, or it’ll eventually run out of runway.

Is BETR financially stable enough to weather storms?

The picture is mixed. On one hand, they have decent cash reserves (18% cash-to-assets ratio vs. S&P 500’s 7%). On the other hand, their debt-to-equity ratio of 56% is concerning, especially for a company burning cash.

What happens if the market turns sour?

BETR’s track record during downturns is alarming. During the 2022 inflation shock, the stock plummeted 99.3% and still hasn’t recovered to pre-crisis highs. This suggests BETR investors should buckle up for extreme volatility.

Is BETR reasonably priced at $68?

Not really. With a price-to-sales ratio of 6.5 (vs. S&P 500’s 3.2), you’re paying a significant premium for future growth that may or may not materialize.

Could the social media buzz justify this premium?

While momentum can carry stocks higher in the short term, fundamentals typically matter more in the long run. At these prices, BETR needs to execute flawlessly to justify investor faith.

The Bottom Line: Proceed with Extreme Caution

The Bull Case:

• Exceptional revenue growth in a large addressable market
• Social media momentum could continue driving the stock higher

The Bear Case:

• Massive losses that show no signs of improving
• Expensive valuation leaves little room for error
• Terrible performance during market stress
• Heavy reliance on social media hype rather than fundamentals

See, investing in a single stock without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

Who might consider BETR?

Only risk-tolerant investors who can afford to lose their entire investment and believe the company can achieve the operational turnaround needed to justify its valuation. A smarter play would be to either wait for a significant pullback that offers better entry prices or clear evidence that the company is moving toward profitability.

The mortgage industry does have digitization opportunities, but BETR needs to prove it can capitalize on them profitably. Right now, you’re betting on potential rather than performance—a gamble that’s particularly risky at these elevated prices.

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