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iBuyer Offerpad goes public at $2.7B valuation

The iBuyer hopes to raise money on the New York Stock Exchange after merging with a Spencer Rascoff-lead SPAC

Instant homebuyer Offerpad quietly became a publicly traded business Thursday, after it merged with a blank check company led by former Zillow CEO Spencer Rascoff one day earlier.

Offerpad’s transition escalates the rivalry between Rascoff and his former company Zillow. It also nudges Offerpad from intriguing upstart to another business vying to move iBuying from dazzling concept to profit making enterprise.  

The newly consolidated outfit, named Offerpad Solutions and under the ticker name “OPAD,” traded at a hair under $9 per share on the New York Stock Exchange Thursday, penciling out to an approximately $2.7 billion market capitalization, according to capital markets experts.

That estimate (complete market cap information had yet to be fully incorporated into trading data by Thursday afternoon) is based on the company’s 300 million shares of common stock, and falling short by 10% of its $10 per share benchmark.

“There are a little more than 300 million shares of OPAD outstanding,” explained Ramey Lane, a law partner at Vinson & Elkins who specializes in capital markets and analyzed the businesses’ proxy statement prior to the completed merger. “At an assumed $10 per share, that gets you about a $3 billion valuation.”

Rascoff declared that the merged company would be valued at $3 billion in March when his Supernova Partners Acquisition Company announced the union with Offerpad, a Gilbert, Arizona company founded by current CEO Brian Bair.

Rascoff departed from Zillow in early 2019, due in part to criticisms he didn’t bring the home listings giant into iBuying at a rapid enough pace. A spokesperson for Rascoff reached out to say that he did not step down as CEO due to disagreements over Zillow’s iBuying program.*

Today, under CEO Rich Barton, Zillow’s revenue and expenses come predominantly from iBuying.

Offerpad actually partnered with Zillow when, under Rascoff’s leadership, it piloted its Instant Offers program in Las Vegas and Orlando in 2017. Offerpad severed the relationship in April 2018 when Zillow announced it would begin buying houses and reselling them.

Since leaving Zillow, Rascoff has formed three blank check companies. And in March, he stated in a press release that the Offerpad merger will “provide up to $650 million in gross cash proceeds.”

But per yesterday’s merger announcement yesterday, Offerpad Solutions ended up generating $284 million. That money will go “invest in technology and product development, to pay transaction expenses and for other general corporate purposes including the repayment of indebtedness,” the company announced.

Offerpad turned a $9.2 million profit in second quarter, a rare feat in iBuying in which the cost to purchase homes plus operating expenses traditionally exceed revenues from reselling the home. But Bair acknowledged last month that Offerpad would likely lose money the next two quarters thanks to increased marketing costs and ramping up its engineer and product teams.

Offerpad generated $379 million in second quarter revenue. Messages left with the company Thursday went unreturned.

* UPDATE on 9/6/2021: The sentence, “Rascoff departed from Zillow in early 2019, due in part to criticisms he didn’t bring the home listings giant into iBuying at a rapid enough pace,” was updated to add the clause “at a rapid enough pace.” Zillow’s iBuying division launched when Rascoff still served as company CEO.

  • UPDATE on 9/8/2021: A sentence was added because a spokesperson for Rascoff reached out to say he did not leave Zillow over iBuying.

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