Compass successfully completed its initial public offering on Thursday, as the stock began trading publicly on the New York Stock Exchange at 12:05 p.m. EST.
The stock, trading under the ticker symbol COMP, opened at $21.25, a $3.25 premium over its offering price of $18 per share, which was itself at the low end of its reduced target range. The opening share price gives Compass a valuation around $8 billion. However, the fully diluted valuation, which includes restricted stock units and options, is $10.3 billion.
The stock traded slightly down from its opening price in early trading. (See Inman’s Guide to Compass’ IPO for what to watch for as the day unfolds.)
Earlier on Thursday morning, Compass co-founders Robert Reffkin and Ori Allon rang the opening bell at the NYSE in celebratory style. Compass raised $450 million from the offering.
Appearing on CNBC’s Squawk Box before market opening on Thursday morning, CEO Reffkin struck a bullish note, saying, “Every investor who ever invested in Compass through all our [fundraising] rounds, with this IPO, they are realizing success. I’m confident that these [institutional and retail] investors will achieve the same success in their investment over time as well.”
On Wednesday, the brokerage filed a S-1 amendment with the U.S. Securities and Exchange Commission (SEC) that revealed an initial public offering (IPO) goal that’s half of what the company previously announced. The company cut its initial Class A common stock offering from 36 million to 25 million shares and dropped the price per share to $18, roughly half of the $828 million to $936 million goal outlined in a March 23 S-1 amendment.
Reffkin and his mother, Ruth, after the bell ringing. (Courtesy of Compass)
The reduced demand for the stock signaled less interest from institutional investors than expected, but some analysts are saying there’s another important factor at play as the company goes public: individual investors’ suddenly more bearish approach to tech IPOs.
Alex Wilhelm at TechCrunch explained on Wednesday Compass’ IPO aligns with results of recent IPOs by other tech-focused companies, namely Amazon-backed food delivery startup Deliveroo that closed 43.55 percent below its opening price on the London Stock Exchange.
In an email to Inman, Evergreen Managing Principal Brad Johnson said the Archegos Capital Management scandal may have impacted Compass’ IPO dreams as well. (The scandal centers on investor Bill Hwang, who despite a long history of shady business dealings and insider trading, convinced Japan’s Nomura Bank, Switzerland’s Credit Suisse, and Goldman Sachs and Morgan Stanley — both of which are underwriters of Compass’ IPO deal — to extend him lines of credit. The companies Hwang invested in, including ViacomCBS and Discovery, have experienced dramatic stock value decreases in the past week as Archegos collapsed.)
“They got a bit unlucky with the Archegos drama this week but, slashing their target raise just before going public is not a great look [for Compass],” Johnson said. “[However], this doesn’t necessarily mean the IPO won’t be successful.”
TechCrunch said tech stocks have experienced these wanes in interest before only to come back much stronger in following quarters, meaning Compass’ stock could find great success on the public market.
