Residential brokerage Compass is now a publicly traded company, with shares trading at $20.15 at close of the New York Stock Exchange on Thursday.
The New York City-headquartered company began offering shares Thursday morning. Investors initially paid $21.15-a-share to grab a stake in the fast-growing but money-losing real estate outfit before trailing off.
Compass CEO Robert Reffkin made good on a pledge announced last fall to go public, the next logical fundraising move for the eight-year-old company. Compass had already netted $1.6 billion in venture capital money, with Tokyo-based SoftBank the largest financier.
Last week, the brokerage announced in a Securities and Exchange Commission filing that it sought around $882 million from its initial public offering by trading 36 million shares at $23 to $26.
That ambition was scaled back considerably yesterday when the company disclosed it would offer 25 million shares at a price point closer to $18.50, or an aimed-for fundraise of $463 million.
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Compass’s hoped-for market value is $7.2 billion, according to a note released Wednesday by Nima Wedlake, a principal at Thomvest Ventures.
Wedlake hypothesizes that Compass will enjoy a greater market value than Realogy, arguably its most apples-to-apples competitor, which has a market cap of $1.8 billion.
However, “the company will trade at a lower multiple than other tech-enabled real estate platforms such as Zillow, Opendoor, Redfin, and eXp.”
Whether Compass is “tech enabled” has been met with skepticism by other analysts, such as Jack Micenko of Susquehanna International, who sees the brokerage having no unique tech that can transcend housing market booms-and-busts.
Compass has consistently lost money, posting a $270 million net income loss in 2020 and over $1 billion since its inception in 2013. Compass last year generated $664 million in revenue, when agents’ commission shares are subtracted.
One subplot of palace intrigue: Reffkin and fellow Compass co-founder Ori Allon rang the NYSE’s ceremonial opening bell.
While Reffkin is CEO and chairman of the board, Allon left the board in February and is not mentioned at all in Compass’s otherwise voluminous SEC filings except as a company shareholder.
Questions left with Compass about Allon’s present role have gone unreturned. He is listed on Compass’s website as “co-founder and chief strategist.”
In just eight years, Compass has rocketed to No. 2 in sales volume among all brokerages, trailing only Realogy, according to RealTrends data released last week. The brokerage currently operates in 46 markets with 19,000 agents nationwide, with much of the growth coming from the more than $300 million in acquisitions it’s paid over the last three years.