Inside Opendoor’s IPO filing: Nearly $1B in losses and new ownership structure

Softbank will hold 15% stake; billionaire Len Blavatnik is an investor

Opendoor CEO Eric Wu, Len Blavatnik and Chamath Palihapitiya (Getty)
Opendoor CEO Eric Wu, Len Blavatnik and Chamath Palihapitiya (Getty)

Opendoor took another step toward a public offering Monday with an IPO filing that details the company’s nearly $1 billion in losses to date.

The iBuyer’s S-4, filed with the U.S. Securities and Exchange Commission, gives an unvarnished look at the seven-year-old company’s financials, its growth plan and the ownership structure that will be in place after it merges with Chamath Palihapitiya’s blank-check company. Opendoor’s prior backers include SoftBank and billionaire Len Blavatnik’s Access Industries.

Opendoor previously said the deal with Palihapitiya’s Social Capital Hedosophia Holdings II will give it $1 billion in new cash. (Proceeds include $600 million through a PIPE, or private investment in public equity, the companies said, with Palihapitiya investing $100 million personally.) Overall, the deal gives Opendoor an enterprise value of $5 billion, the filing said. Following are other key takeaways:

Who will own this thing? SoftBank, which invested $400 million in Opendoor in 2018, will hold a 13.8 percent stake, according to the filing, followed by entities affiliated with Khosla Ventures (8.7 percent) and AI Liquid RE LLC, an entity controlled by Len Blavatnik’s Access Industries (6.5 percent). Social Capital and seven of its directors will control a 5 percent stake.

Board in formation. Eventually, Opendoor will have a seven-person board of directors. For now, the sole director — who isn’t a company exec — is Adam Bain, ex-COO of Twitter and a former News Corp. exec who is a director of Social Capital. A nominating committee will identify other candidates.

CEO Eric Wu was the lowest-paid exec last year. The chief executive’s base salary in 2019 was $275,000, 15 percent lower than co-founder and CTO Ian Wong’s base pay of $325,000. Former CFO Jason Child, who left in May 2019, made $400,000. Gautam Gupta, who took over for Child, made $350,000, as did Julie Todaro, head of homes, and Tom Willerer, head of product. As of Jan. 1, 2020, Wu got bumped up to $325,000.

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Poor Eric? Not quite. After the deal closes, the CEO will have 32.8 million shares for a 6.2 percent ownership stake.

Strategic (i.e. meteoric) growth plan. Opendoor said it’s “just scratching” the surface in 21 markets, and it plans to expand to the top 100 markets in the U.S.

Update on 2020 financials. Due to Covid, and the need to suspend operations for several weeks, Opendoor sold 7,832 homes during the first half of the year, compared to 8,985 homes a year prior. Its revenue dropped accordingly: According to the filing, Opendoor’s revenue through June 30, 2020, was $1.9 billion, down from $2.3 billion during the first half of 2019.

No timeline on profitability. Opendoor has racked up losses since it was founded, and expects that to continue “for the foreseeable future.” (The company’s total losses topped $909 million as of June 30, 2020. It lost $118.1 million during the first half of this year.) Likewise, it said its working capital needs will keep growing.

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