Compass’ Value Drops Under $4B As Shares Hit New Low

Compass shares fell to a new low, dropping below $10 for the first time on Monday.

The stock opened at $10.39 before dropping to $9.58 by 2 p.m. It’s the lowest the brokerage has traded and is 52 percent below the company’s debut price on April 1 on the New York Stock Exchange after its initial public offering.

Compass dipped down to $10.74 in October, after its lockup period ended in late September, terminating trading restrictions from its IPO on 200 million shares. But the stock had recovered by Nov. 1 and Compass was trading at just over $13.50 before it began to fall.

As the price plummeted this month, the company reported a net loss of $100 million in the third quarter as expenses increased year-over-year by 53 percent. It also wrapped up a long-standing dispute with tech entrepreneur Avi Dorfman, recognizing his role in founding the company and settling out of court last week.

Compass’ biggest backers, SoftBank Group and Discovery Capital, appear to be holding on for the ride. The most recent filings with the U.S. Securities and Exchange Commission show that neither investor has reduced their stake in the brokerage as of Sept. 30.

Jason Helfstein at Oppenheim, which has a buy rating on Compass, said Monday’s drop below $10 was largely a function of President Joe Biden renominating Jerome Powell as chair of the Federal Reserve.
“Rising interest rates [are] bad for real estate and bad for high growth tech companies,” he said. “If you look at the performance today, that’s what’s performing the worst.”

Redfin is down 4 percent today, while eXp Holdings’ shares were down 4.5 percent. Fathom, another discount brokerage, is trading 3 percent below its last close, while Realogy and Dougla Elliman’s parent, Vector, is up almost 70 and 25 basis points respectively after falling earlier in the day.