Unpacking Opendoor’s S-4 Filing



Opendoor, the nation’s largest iBuyer, is going public. It is doing so via a merger with Social Capital Hedosophia Corp II (NYSE: IPOB), which is a special purpose acquisition company (SPAC) led by investor Chamath Palihapitiya. Opendoor published an investor presentation as part of its merger announcement in September, and last week the company filed its S-4 (similar to an S-1, but used for companies engaged in a merger process). The transaction values Opendoor at $4.8B (pre-merger value) and the company will receive north of $1B in proceeds ($600M PIPE and $414M via merger with IPOB). While the SPAC merger process is quite interesting on its own (good posts on the topic here and here), this post will focus in on the Opendoor business, its progress to date and its prospects for the future.

Opendoor, founded in 2014, transforms the process of selling a home into a seamless digital experience, eliminating uncertainty for sellers. Sellers can go to Opendoor.com, receive an offer for their home, sign and close on the date of their choice — a dramatic improvement over the traditional selling process which can take 100+ days. In return, Opendoor receives a 6–12% discount on the market value of the home. This model is remarkably consistent with the vision described in Opendoor’s Series A presentation (worth a read). In addition to the spread captured when buying and selling homes, Opendoor earns revenue via ancillary services related to the real estate transaction, including title insurance, escrow services and (Read more...)