The brokerage’s stop rose to $ 22 before closing at $ 19.75, up 9.7 percent from the public offering price.
The first Compass market day is over. After setting the initial price per share at $ 18, the tech-savvy broker (NYSE: COMP) experienced a little pop on day one, with the stock hitting $ 22.11 before hitting $ 19. $ 75 per share landed – a 9.7 percent increase from the public offering price. when the New York Stock Exchange closed at 4 p.m. EST for that day.
With the increase in price per share, Compass’ estimated market value is now $ 7.2 billion. This puts Compass in the league with the market caps of tech-savvy brokers like Redfin ($ 6.83 billion at the close of the market) and eXp ($ 6.27 billion). Although the business models differ, Zillow and Realogy are at two extremes in this area: Zillow’s market cap is $ 32.2 billion and Realogy’s market cap is $ 1.82 billion.
Venture capitalist Paul Levine tweeted, “MeInvestors don’t value Compass as much as their high-tech counterparts $ RDFN, $ Z., $ EXPI, and $ OPEN. As a result, Compass ends up somewhere between “real estate technology” and traditional mediation ($ RLGY, $ RMAX) in terms of multiple / valuation. ”
In a live interview with Bloomberg, Compass CEO Robert Reffkin said he wasn’t concerned about the gossip related to the lowered offering and valuation, as $ 450 million was still enough to fund the company’s growth goals.
“The goal was never an evaluation [and] The goal was never a prize, ”he said. “The goal was a capital increase and we achieved that goal and achieved that goal.”
“With this IPO, we invested hundreds of millions of dollars in the company to accelerate our investments in our technology platform and create a one-stop-shop solution and modern platform for real estate agents that can meet all of their needs and better serve their customers and grow their business, ”he added.
There have been tons of comments on social media about Compass’ offering and its importance to the company in terms of its value in the real estate industry and on Wall Street. Paul Levine, Managing Partner of Sapphire Ventures, posted a continuation of his March 5th IPO thread explaining what may have affected Compass’ IPO goal post.
“I wrote on the subject last month and forecast a valuation of $ 15 billion to $ 20 billion if Compass is valued similarly [Redfin] and other tech-centric brokers, ”he said. “Investors don’t value Compass as much as their comparable high-multiple-tech colleagues [Redfin], [Zillow], [eXp], and [Opendoor]. ”
“As a result, Compass lands somewhere between ‘Real Estate Tech’ and traditional brokerage (Realogy and RE / MAX) in several areas [and] Assessment, ”he added.
Levine also said outside forces were at play, such as the bearish approach of public investors to investing in tech companies.
“The IPO market has cooled overall,” he concluded. “Many recent IPOs have cut prices, got off to a weak start, or have been abandoned altogether. This is a macro factor that affects Compass, but is not company specific. “
Although the focus was mostly on day one results, Forbes employee and investment expert David Trainer told Inman that it will take up to three years to fully understand Compass’s performance and its future in the stock market.
“You know, Wall Street is doing a really good job of making sure the IPO looks good and has a ‘pop’ that day because it looks like the IPO is healthy,” he said. “There’s not much to say at the moment, but the first day of the IPO isn’t necessarily representative of the quality of the overall offering.”
“We have to wait at least until we have passed the period in which the insiders are allowed to sell. [which is called] the embargo, ”he added. “I would at least wait for the lock-up period to see how much the insiders are willing to hold on to the stocks.”
“But we usually talk for at least one to three years [to see how they perform.]”
The day before the IPO was rife with speculation when an amended S-1 filed with the SEC revealed that the company had closed its offering of 36 million shares at $ 23 to $ 26 per share on 25 million shares had dropped to $ 18 to $ 19 per share. As a result, the funding target dropped from a maximum of $ 936 million to $ 450 million, while the estimated valuation dropped from $ 10 billion to $ 7 billion.
As of Thursday’s market close, however, Compass’s fully diluted valuation, which includes restricted stock units and options, is approximately $ 10.3 billion according to the company’s estimates.
Email Marian McPherson