Compass Needs to Flip the Narrative

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Slapping a Silicon Valley ZIP Code on a home from Arizona could be a bit deceptive, even when it’s a gem.

Compass Inc. is the newest instance of a enterprise that appeared to attempt to be one thing it wasn’t. Very like WeWork, an office-sharing firm that was valued like a expertise platform, Compass is a real-estate brokerage firm that gave the impression to be within the enterprise of cloud-based software program.

The excessive tech veneer pale shortly. Compass priced shares for its public providing final week at $18, a major haircut from its preliminary vary of $23 to $26. Within the 4 days it has been available on the market, its inventory is down 13%.

Conventional full service dealer Realogy fetches a modest a number of of 0.83 instances enterprise worth to trailing gross sales whereas true tech agency Zillow Group is in a special neighborhood at 9.5 instances. Compass is now close to the decrease finish of that vary at 2.1 instances.

It deserves some premium to different real-estate brokerages. Whereas not Compass’s most important income generator, its expertise definitely appears to matter. Final yr, Compass mentioned its brokers bought properties in 21% fewer days on common relative to rivals on properties of comparable worth in the identical cities.


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