Opendoor valuation soars to $18B ahead of IPO

iBuyer began trading on Nasdaq on Monday

National /
Dec.December 21, 2020 01:35 PM
Opendoor CEO Eric Wu and Chamath Palihapitiya (Getty)

Opendoor CEO Eric Wu and Chamath Palihapitiya (Getty)

Even before Opendoor’s official stock market debut on Dec. 21, the iBuyer’s valuation soared to nearly $18 billion as Wall Street investors cheered its merger with a special purpose acquisition company.

Shares of Chamath Palipatihiya’s blank-check company more than tripled Friday after it completed the merger with Opendoor. Previously, the company had an enterprise value of $5 billion when the deal was announced in September.

Opendoor’s stock was priced at $29 per share as of midday on Monday when it began trading on Nasdaq under the ticker symbol “OPEN.”
“We are just getting started,” CEO Eric Wu wrote in a blog post.


He acknowledged that Opendoor, like other startups, had its fair share of challenges and that its trajectory wasn’t a straight line. “As we look to this next chapter, we will continue to work hard when no one is looking,” he wrote.

The company, founded in 2014, uses an algorithm to buy and sell homes for a fee of between 6 and 8 percent. It is the leading iBuyer, or instant home buyer, in a hot — but nascent — slice of the residential market, accounting for just 0.5 percent of U.S. home sales last year.

Prior to the SPAC deal, Opendoor raised $1.3 billion from investors including SoftBank, Khosla Ventures, Lennar, General Atlantic and Access Technology Ventures.

But the company, which is not profitable, reported a net loss of $339 million last year. When the pandemic hit, it suspended home-buying. To stem its losses, Opendoor laid off 35 percent of its staff and sold off a large chunk of its inventory.

The deal with Palihapitiya’s special purpose acquisition company gave Opendoor $1 billion in cash, and the company plans to use that war chest to grow.

Opendoor has projected $10 billion in revenue by 2023, and it said by capturing 4 percent of the U.S. housing market, it can be a $50 billion company.






    Related Articles

    arrow_forward_ios
    Berkshire Hathaway HomeServices CEO Christy Budnick (Berkshire)
    Berkshire Hathaway HomeServices names new CEO
    Berkshire Hathaway HomeServices names new CEO
    Cherre CEO L.D. Salmanson (Cherre/Facebook)
    Real estate data firm Cherre raises $50M
    Real estate data firm Cherre raises $50M
    (iStock)
    Hot, hot, hot: Resi market sets new price records in March
    Hot, hot, hot: Resi market sets new price records in March
    (iStock)
    Homebuilder sentiment ticks up in April
    Homebuilder sentiment ticks up in April
    Andrew Florance, CEO of CoStar Group (CoStar, Homes.com)
    CoStar to buy Homes.com for $156M
    CoStar to buy Homes.com for $156M
    (iStock)
    Mortgage requests, refinancings continue to drop
    Mortgage requests, refinancings continue to drop
    Howard Hanna CEO Helen Hanna Casey and Compass CEO Robert Reffkin (Howard Hanna Casey, Getty)
    Howard Hanna accuses Compass of poaching agents, stealing trade secrets
    Howard Hanna accuses Compass of poaching agents, stealing trade secrets
    The effective rate was 1.1 percent, on average, in 2020, down from 1.14 percent in 2019. (iStock)
    Homeowners’ property taxes grew twice as fast last year
    Homeowners’ property taxes grew twice as fast last year
    arrow_forward_ios

    The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

    Loading...