Compass has made a last-minute S-1 with the U.S. Securities and Exchange Commission (SEC), slashing the number of shares it expects to sell from 36 million to 25 million, and dropping the price per share from $23-$26 to $18-$19 per share.
Compass now expects to raise between $450 million and $475 million on the day of its IPO. When it originally filed its initial S-1, the goal was $828 million to $936 million. Now, the company is valuated at slightly over $7 billion, another drop for the company as its original stock valuation was expected to be around $10 billion. The move shows distinct insecurity with jumping into public status.
Compass’ successful IPO depends heavily on whether investors see the company as a proptech platform or a traditional brokerage along the lines of Realogy or RE/MAX.
Paul Levine, Partner at Sapphire Ventures and Board Member of Side Real Estate, tweeted optimistically earlier this month:
“If Compass is valued at the same multiple as EXPI, this implies a $13B market cap for Compass. At Redfin’s higher multiple, this implies a $28.7B market cap. I believe $15-20B is the likely range.”
The conclusion, thus far at least, is that investors haven’t bought into the story enough for the company to determine the final price per share.