Tech-enabled real estate company Compass closed its first day of trading at $20.15, about 12 percent above its IPO price.
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The company priced its shares at $18 apiece, the low end of its target range. Compass raised about $450 million through its IPO, and began trading at $21.25 on Thursday, around 22 percent above its IPO price.
The company initially set a price range of between $23 and $26 before lowering the range on Wednesday to between $18 and $19.
CEO Robert Reffkin said in an interview Thursday that he was pleased with the stock performance on the company’s first day of trading.
“We met our goal,” Reffkin said. “The goal wasn’t a price or a valuation, the goal was raising a certain amount of capital to fund the business.”
While Compass is often perceived as a tech company, it operates more or less like a traditional real estate brokerage. What sets it apart is that it offers its real estate agents a suite of digital tools to better market themselves and their listings. Agents can use Compass’ customer relationship management platform and tools to make digital videos, ads and newsletters.
The inspiration for Compass came from Reffkin’s mother, who was a real estate agent for most of Reffkin’s life. She’s now an agent with Compass.
“I saw at a young age that, on one hand she’s an entrepreneur, and all agents are … but on the other hand, they’re an underserved customer base. I saw her struggle because she didn’t have the tools she needed.”
On Compass being a tech company or a real estate company, Reffkin said the company’s main goal is to help agents be successful, and the company primarily does that through technology. The research and development investment that goes into traditional brokerages is minimal, Reffkin said, and agents are often using nine different software providers to do their job.
“If you’re a merchant, you can get everything you need from Shopify,” Reffkin said. “Agents need and deserve the same.”
Compass’ IPO comes after a busy year for the residential real estate market. The company has added about 5,000 agents to its platform in the past year.
Compass is backed by investors including the SoftBank Vision Fund and IVP.
Illustration: Li-Anne Dias
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