Compass agents who invested in the brokerage ahead of its hotly anticipated IPO a year ago can lament the 70 percent plunge in its stock price since then. CEO and co-founder Robert Reffkin has a lot more at stake.
Reffkin exuded optimism when Compass shares debuted at $18 last April, valuing the firm at $7 billion and his stake at more than $460 million.
“This is what I expect will be the lowest valuation we’ll ever see,” he told Forbes at the time.
Less than a year later, Compass shares have plunged 70 percent, the firm has a market capitalization of $2.4 billion and Reffkin’s stake is now worth less than $150 million.
Reffkin, whom Forbes estimated was worth more than $500 million when the stock debuted, holds about 6.6 percent of the outstanding shares and 49 percent of its voting power, according to a February SEC filing. His equity stake consists of 2.3 percent of Compass’ Class A stock plus all its Class C shares.
It’s a difficult lesson for the CEO, who co-founded Compass in 2012 and built it into one of the country’s largest brokerages with 26,000 agents across nearly 70 markets. It also shows that even a firm’s biggest cheerleaders can bear financial pain when things go south.
“I can sympathize with the emotional roller coaster ride of building a company from idea to liquidity event coupled with all the promises and perils that brings with it,” said David Friedman, co-founder of the wealth intelligence platform WealthQuotient.
Reffkin, who bought a 2,200-square-foot duplex penthouse in Tribeca for $16 million in 2020, a few months before the firm filed to go public, didn’t sell shares in the IPO and told Forbes at the time that he didn’t plan to do so.
“I don’t think I ever thought about selling shares,” Reffkin said in the April 2020 interview.
Less than a year later, on the brokerage’s fourth-quarter earnings call in February, Reffkin took the long view on Compass’ mounting losses, affirming its continued pursuit of market share while acknowledging that free cash flow is “the ultimate arbiter of financial success” and saying he expects the firm to be cash-flow positive by next year.
Compass declined to comment.