Compass Shares Surge in Stock Market Debut

Real estate brokerage Compass climbs on its first day of public trading.
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Compass  (COMP) - Get Report was going in the right direction Thursday as the real estate brokerage surged in its first day as a public company.

Shares of the New York company were climbing 17.6% to $21.17. The stock opened at $21.25. The initial public offering was priced at $18 a share.

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The company on Wednesday filed an amended Securities and Exchange Commission registration statement for its initial public offering. In the filing the company cut the total size of the offering and the expected offer-price range,

Compass lowered the estimated offer-price range to $18 to $19 a share from the previous $23 to $26.

The number of shares to be offered also was reduced to 25 million from 36 million.

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Compass would still have a market value of $7.35 billion at the top of the new range based on the shares outstanding listed in its filing, according to Bloomberg. 

Fully diluted to include employee stock options and restricted stock units, Compass would have a valuation of as much as $9.5 billion.

Compass raised more than $1.5 billion from SoftBank Group's Vision Fund and other investors.

The company said that revenue totaled $3.7 billion in 2020, up 56% from a year earlier. Compass reported net losses of $388 million and $270.2 million in 2019 and 2020, respectively.

Last year, Compass said it was involved in residential real estate transactions totaling $152 billion - or 4% of the U.S. market,

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"Our ambition is to provide agents everything they need to serve their clients, grow their business, and realize their entrepreneurial potential," Robert Reffkin, founder, chairman and CEO, said in a regulatory filing. 

Reffkin said more than 86,000 brokerage firms operate in the U.S. "and the overwhelming majority have neither the technological expertise nor the capital to build the software and services their agents need to thrive."

Compass was founded in 2012 by Reffkin and Ori Allon as Urban Compass. The website says it now has 18,000 agents, mostly in the Middle Atlantic states, the Southeast, Colorado and California.

The U.S. IPO market produced its busiest quarter in over two decades, according to a report by Renaissance Capital, with 100 IPOs raising $39.2 billion.

But the report said that newly public companies have lagged. The Renaissance IPO Index was down 7% in the first quarter, while the S&P 500 rose 4% in the same period.

On average, companies that have gone public in the quarter have lost 14% from their first-day closes, the report said.