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Opendoor’s Public Debut Is A Huge Win For CEO Eric Wu

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The SPAC increase—a cash faucet for Wall Avenue, and an enormous potential hazard for retail buyers—has minted one other winner on the within of a deal. 

Eric Wu, cofounder and CEO of Opendoor, turned a billionaire on Monday, the day the home-buying agency started buying and selling by way of a merger with a SPAC referred to as Social Capital Hedosophia Holdings II. On the shut of markets, his 6% stake within the agency was price $1.01 billion. It’s unclear whether or not he’ll stay a billionaire on the finish of after-hours buying and selling.

Wu, 37, printed a blog post on Monday morning celebrating the deal. “In 2014, a small group of us dreamt of a future the place you could possibly purchase and promote a house on the faucet of a button,” he wrote. “Like most startups, we’ve confronted our fair proportion of exhausting issues, however we believed within the potential impression of what we have been constructing and put within the exhausting work to sort out impediment after impediment.”

Via a spokesperson, Wu declined to remark for this text.

Opendoor is the main enterprise within the “iBuying” market, a comparatively nascent trade that lets householders rapidly offload their homes to the corporate, which then lists them on its platform. Opendoor makes use of algorithms to find out how a lot it pays—too little, and potential prospects received’t need to promote; too excessive and the corporate may take a loss. 

Final yr, Opendoor bought almost 19,000 properties, producing income of $4.7 billion, although it posted a web lack of $339 million. Gross sales dropped off dramatically this yr, doubtless partially because of the pandemic. Via the top of September, income fell to $2.3 billion (greater than $1 billion lower than the identical interval in 2019), whereas losses amounted to $199 million. 

These losses, whereas trending in the appropriate path, have raised questions on Opendoor’s long-term path to profitability. The corporate, for its half, says it’s keen to lose cash within the close to future because it battles for market share. “5 years in the past, we have been in like two markets, three markets,” cofounder Ian Wong instructed Forbes this fall. “Right this moment we’re in 21.” 

iBuying stays a large open area, whilst Opendoor competes with Zillow, Redfin, Offerpad and different startups. According to The Actual Deal, the trade nonetheless contains simply 0.5% of the $1.6 trillion home-buying market.

Buyers clearly aren’t spooked. When Opendoor’s public providing was first introduced in September, the corporate had an enterprise worth of $4.8 billion. By Monday morning, its market worth stood at almost $18 billion. 

Opendoor joins different newly public tech corporations with hovering inventory costs, together with Airbnb, DoorDash and Snowflake. Will these positive aspects final? Time will inform, however the valuations positive look lofty.

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