5/7/2023 0 Comments Compass software tinytermCompass' share price has fallen as low as $2.23 in recent weeks - a precipitous decline from a high of $20.15 shortly after it began trading last year.Ī graph showing the share price of Compass from its IPO on April 1, 2021, to October 6. Investors have soured on companies that offer only speculative growth, as interest rates have risen and concerns have grown about the impact those higher rates will have on the health of the economy. The company lost $494 million in 2021, and in the first half of 2022, bled $289 million on $3.4 billion in revenue. Grabbing top talent helped the company's revenue soar from $370 million in 2017 to $6.4 billion in 2021.īut Compass has never turned a profit. It was a practice that rivals called unsustainable in the thin-margin brokerage business. He branded his startup as much a tech firm as a brokerage and reaped the higher valuations ascribed to companies in that industry.Ĭompass, meanwhile, used its prodigious fundraising - it took in $1.6 billion from backers before going public, according to PitchBook - to recruit top brokers with large bonus checks, stock awards, and generous commission splits. Reffkin, a 43-year-old former Goldman Sachs executive, had little experience in real estate before cofounding Compass in 2012. "The firm's executives have admitted to themselves that there won't be innovation." Tech had been central to Compass' original missionįor years, Compass executives, including Reffkin, credited the company's tech with its meteoric rise in the residential-real-estate business. "If you cut staff by that much, you're not building new and cool things anymore," one veteran engineer, who left on his own earlier this year, told Insider. With the September layoff centered on tech employees, four former engineers who had worked intimately on its product offerings for years, said the company's efforts to establish itself as one of the leading players in the multibillion-dollar intersection between the property and technology industries - known as proptech - had been dashed.Ī spokesman for Compass declined to comment on the record for this article. In June, Compass let go of 450 workers across the company, including administrative, marketing, and other support staff. The situation leaves Compass in the tenuous position of having to chip away at a tech offering that's core to its brand or potentially risk the kind of cash crunch that eventually beset WeWork, another company that branded itself as a real-estate-industry disruptor but flirted with insolvency after overspending. In an August earnings call, executives were forced to roll out a plan to cut $320 million in operating expenses over the next year, largely through staff reductions, to try to chart a path to profitability. Since going public, the company has continued to bleed losses that have threatened to further accelerate amid the colliding factors of rising interest rates and years of home-price appreciation.Īs a result, the company's value has cratered to about $1 billion, and private-equity firms may even be circling with the hope of taking Compass private. More recently, a raft of setbacks - including its plummeting share price, the departure of a handful of star New York City brokers, and a stalling sales market nationwide - have replaced its once bubbly ambitions to revolutionize the residential brokerage business. The tech, a suite of proprietary software developed by its engineers and product team over the past decade, was a pillar of the $7 billion value the company achieved in its initial public offering in April 2021 - the highest price ever for a residential-real-estate brokerage. Reffkin (left) and Compass cofounder Ori Allon.
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