Recently, the IPO (Initial Public Offering) market has become interesting to a large number of completely new investors who have not even been participants in the stock market. There is one big reason — profitability. The average return after the lock-up period is 40.5%, which corresponds to 162% annual in dollars (excluding commissions and personal income tax). In this article we will discuss the key details of Opendoor IPO: is Opendoor publicly traded, the history of the company, when is Opendoor IPO date, Opendoor IPO price and everything you should know to make a decision whether to invest in it or not.
If you have ever been involved in buying or selling a house, you might agree that it causes everything except for pleasant feelings. The good news is that IT innovations happen not only in e-commerce and devices, but also in the real estate industry. It is called proptech, similar to biotech, and Opendoor is one of the best examples. No wonder the Opendoor IPO happened so quickly.
Opendoor makes instant cash offers on homes through an online process, makes repairs on the properties it purchases and relists them for sale. Their app simplifies everything for users: with just a few clicks you can figure out your home’s valuation, set up inspections, and get through the closing, title, and escrow processes in a breeze.
In 2014 Keith Rabois, Eric Wu, Ian Wong, JD Rosspendoor came together to develop this idea in San Francisco. Eric Wu already had successful experience, he previously founded Movity, a real-estate startup acquired by Trulia, Keith Rabios is a serial entrepreneur, and JD Ross, now a general partner at Atomic. Not a bunch of fresh grads, so with such a powerful background and network the startup was destined to succeed.
That same year they raised their first $9.95m venture capital round led by Khosla Ventures in May 2014. In the next 4 years Opendoor raised $700 million in funding: $400m from the SoftBank Group Vision Fund and $300m from General Atlantic. At the time, the enterprise valuation was $3.8b.
The business was successful in California and the company was expanding fast all over the States. By 2020 they were present in 22 markets. In 2019, Opendoor introduced mortgage services through Opendoor Home Loans, an in-house mortgage business. That year the company sold almost 19,000 homes and generated $4.7 billion in revenue. Success on the market plus hype around the IPO that year led to many questions like ‘When is Opendoor going public?’
But that would be too soon because in 2020 the pandemic adversely affected the real estate business. The company had to lay off 35% of the staff because it had to suspend home buying and cut the expenses. The company resumed its operations in May 2020 by introducing a contact-free platform to help people buy and sell homes digitally.
On September 15, 2020, Social Capital Hedosophia Holdings Corp II announced its intention to merge with Opendoor and we came close to finding out when is the Opendoor IPO date.
The deal valued the company at an enterprise value of $4.8 billion. 6 months later we knew the Opendoor IPO date and price.
Opendoor’s Public Listing Key Data and IPO Date
IPO Date: December 21, 2020
Stock price (at opening): $31.47
Valuation at IPO: $17 billion
CEO: Eric Wu
Category: Real Estate Stocks
The path to Opendoor IPO 2020 was rather quick in comparison to WeWork IPO or 23andMe IPO who have been on the market 15 and 11 years respectively. Among the choices of Opendoor going public, it’s management chose the most popular way for the IPO - via Special Purpose Acquisition Company(SPAC). SPAC is a shell company that raises money through an IPO to buy a private company and take it public. As opposed to a traditional IPO, all expenses to become listed were taken by the shell company. In the case of Opendoor it was a merger with Social Capital.
Opendoor stock IPO date was on December 21, 2020. Opendoor IPO ticker was predictable — OPEN. Opendoor stock IPO price started at $31.47 per share in the beginning of the trading day and fell to $29 in the middle. However, buyers demonstrated relative strength and the stock grew to $31.25 at the end of the day. The slight fall is quite surprising considering the market potential of Opendoor, but it seems that after the COVID investors are concerned whether the company can sustain and grow. The company reported annual net loss of $286.8 million in 2020 and just $57 million in Q3. Since the Opendoor IPO date shares have dropped 47%. But the numbers reports show that losses shrink, so maybe the company will be on the right track soon.
So What About Investing In It?
The opportunity for the company is huge because real estate is one of the undisrupted fields. To be clear, roughly 6 million homes were sold in the United States in 2019 alone, implying a market size of about $2 trillion based on the current average existing home sale price. In all, residential real estate in the U.S. is estimated to be a $20 trillion market. The company just needs a fraction of this and the funds received after the Opendoor stock IPO will be invested in further disruption of the field.
“More importantly, we have just scratched the surface and believe we are in the early stages of the digital transformation of real estate. Over the coming years, we plan on increasing our market share, launching additional cities across the country, and expanding our products and services to become a digital, one-stop shop for buyers and sellers of residential real estate.” written in one of Opendoor’s reports.
Unfortunately for the company, they are not the only ones at this market. They have two competitors: Zillow and Redfin. But unlike competitors, Opendoor focuses on just buying and selling houses through an app. FYI, none of the competitors are profitable, too.
In the end, we will see who will be the first one to scale to the level of profitability and you can bet on one of them, because they are all sold at very attractive prices.
Is Opendoor a public company?
Yes, the company has gone public last year in December 21, 2020 when it had a merger with a Special Purpose Acquisition Company (SPAC) Social Capital. You can find it under the stock symbol OPEN on NASDAQ.
How much is Opendoor worth?
Before the IPO, the company’s net worth was around $4.8 billion but during the IPO process it received additional $1 billion. We can estimate the current valuation of the company as the market cap which is $8.91 billion (as of December 3, 2021). It is based on the current stock price, not the Opendoor IPO price.
What is Opendoor’s business model?
They earn money by taking a 6–8% fee from each home purchase. In 2020 they sold 9,913 houses compared to 18,799 for the previous year.