Opendoor Has Nearly $1 Billion In Losses To Date
When a company goes public they are forced to open their books and give others a look at the company’s financials. The S-4, filed with the U.S. Securities and Exchange Commission for this 7 year old company, details its growth plan and the future ownership structure. Open door plans to go public not through a normal IPO offering , but by SPAC. It intends to merge with Chamath Palihapitiya’s blank-check company called Social Capital Hedosophia Holdings II (symbol IPOB). Opendoor’s previous investors include SoftBank and billionaire Len Blavatnik. Palihapitiya is investing $100 million personally.
Opendoor has racked up $1 billion in losses and expects losses to continue “for the foreseeable future.” (Losses topped $909 million as of June 30, 2020.) Opendoor sold 7,832 homes during the first half of the year, compared to 8,985 homes a year prior. Its revenue dropped in step with Opendoor’s take through June 30, 2020 at $1.9 billion, down from $2.3 billion during the first half of 2019.
The deal with IPOB will give it $1 billion in new cash. ($600 million through a private investment in public equity (PIPE). Overall, the deal gives Opendoor an enterprise value of $5 billion, the filing said. Following are other key takeaways:
- Softbank, which invested $400 million in Opendoor in 2018 (13.8 %)
- Khosla Ventures (8.7 %)
- Len Blavatnik’s AI Liquid RE LLC (6.5 %)
- Social Capital and seven of its directors will control a (5 %)