UPDATED, 9:01 p.m., Feb. 2: After Covid forced Opendoor into a five-month homebuying limbo in 2020, the newly public company is projecting a 45 percent drop in annual revenue.
The instant homebuying startup projected $2.58 billion in 2020 revenue, down 45 percent year-over-year from $4.7 billion, it said in a regulatory filing Tuesday. It anticipates losing between $98 million and $103 million on an EBITDA basis. That’s compared to a net loss of $339 million in 2019.
Opendoor shared the preliminary financials in conjunction with a disclosure that it is looking to raise more than $600 million through a stock offering, just six weeks after it went public via a SPAC. It plans to offer 24 million shares of its common stock.
Opendoor is yet to price the shares, but estimated net proceeds based on a closing price of $26.12 on January 29. The company could raise just under $700 million if underwriters at Citigroup and Goldman Sachs exercise their shares.
Opendoor currently operates in 21 markets around the U.S. It sold nearly 19,000 homes in 2019. In the filing, Opendoor said it plans to invest in existing and new markets, and will add to its working capital. “The principal purposes of this offering are to increase our capitalization and financial flexibility,” the filing stated. In addition, the Company plans to continue to invest to double the markets it serves in 2021.”
Like other iBuyers, Opendoor suspended homebuying in March when the pandemic threw the housing market into disarray. Between February and July 2020, Opendoor reduced its inventory to $172 million from over $1 billion, according to previous financial reports.
For the first nine months of 2020, Opendoor generated $2.3 billion in revenue, compared to $3.5 billion during the same period in 2019. Its net loss was $198.9 million, down from $247.4 million.
Led by CEO Eric Wu, Opendoor buys homes from owners who want the certainty of a quick closing. After making minor improvements, it aims to sell at a premium and also make money on ancillary services.
The San Francisco-based startup went public in December after merging with a blank-check firm sponsored by Chamath Palihapitiya. Ahead of trading, Opendoor’s valuation soared to $18 billion, about three times its enterprise value of $5 billion in September when it struck the deal with Palihapitiya. The stock closed at $31.25 per share on December 21.
The shares have dipped over the past six weeks. Opendoor’s stock closed at $28.47 per share on Tuesday, up from $26.25 a day prior, giving it a market cap of just over $15 billion.
After going public, Opendoor had $1 billion in cash. But homebuying is an extremely capital-intensive business, and the startup is likely looking to build on its momentum and the liquidity in the financial markets to grow its market share. Earlier Tuesday, brokerage giant Realogy announced a $200 million offering of senior notes, adding to $1 billion raised over the past 12 months.
Opendoor has projected $10 billion in revenue by 2023. It said by capturing 4 percent of the U.S. housing market, it can be a $50 billion company.
This story was updated with Opendoor’s revenue disclosures.