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Compass S-1

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Re: Compass S-1

#41

Post by sib »

didip wrote: post #27

Our business has experienced rapid growth. In 2019 and 2020, our revenue was $2.4 billion and $3.7 billion, respectively, representing a year-over-year increase of 56%. Our net losses were $388.0 million and $270.2 million in 2019 and 2020, respectively. For a company that sells expensive inventories, this falls below my expectation. Compared to Coinbase, given my limited amount of money, I'd rather invest in Coinbas…

I'm pretty sure that they don't count the value of the homes themselves as revenue when they complete a transaction.

I think they can only count the commissions on one or both sides (depending on whether they represent the seller, the buyer, or both.)

Re: Compass S-1

#42

Post by boh »

fny wrote: post #36
boh wrote: post #16

Its a little silly how easily a company can categorize itself as a technology company. Many of the IPOs from the past two years suggests having a website and/or having an app doesn't just make you into a tech company (WeWork is a good example of this). Compass is no doubt eager to foster unreasonable expectations for growth that surpasses the business they're actually in (as real estate brokers) and prefer to imbued…

Is AirBnB a tech company? I'd argue their core business has nothing to do with tech, but they've managed to become the biggest broker for temporary rentals in the US. They did need a good amount of tech to scale and be successful which is why everyone thinks of them as a tech company. In my view, Compass is in the same boat. They want to become the middleman between buyers and agents in real estate. It's a platform p…

AirBnB is a website/app/platform, Compass is a real estate broker. AirBnB can leverage the low-cost economics of software, Compass is a real estate broker (and a pretty conventional one at that). Compass is not a middleman, they are the agents.

Re: Compass S-1

#43

Post by honopu »

nknealk wrote: post #11
twostorytower wrote: post #3

$270M loss on $3.7B in revenue. If they can get opex down, there's some serious money to be made and a lot of growth left here. In my neighborhood I'm seeing more and more houses go up for sale with Compass signs.

Their single biggest expense is “commission and other transaction related expenses” which clocks in at just over 3B. I don’t know how much control they really have over commissions.

If they drive leads, they can capture a percentage of leads they generate for in house agents. This is why Zillow went commission split on transactions, it’s much more lucrative once you have a lead pipeline.

Re: Compass S-1

#44

Post by RobLach »

Axsuul wrote: post #2

Compass is a real estate technology company that provides an online platform for buying, renting, and selling real estate assets. https://www.compass.com

What's the technology?

Re: Compass S-1

#45

Post by RobLach »

Compass's business model is taking VC cash to pay above market rate for realtor labor in an attempt to capture market share purely through more "boots on the ground".

Whether this approach has any long-term value for shareholders seems dubious once the cash injections stop.

Re: Compass S-1

#46

Post by nrmitchi »

bostonsre wrote: post #37
webdood90 wrote: post #30

Earlier quoted context omitted.

> easily worth 5% Easily worth a couple grand, maybe. A percentage like that? No chance in hell.

Why haven't commission percentages gone down over time? It seems like a massive margin that should be trimmed down by competition. I would think there would be more than enough room to under cut the standard rates, cover costs and still make a healthy profit. Is there a low supply of realtors that causes them to be in high demand and helps them keep up their commissions or something like that?

The National Association of Realtors controls a huge percentage of real estate transactions, and works to make sure it doesn't drop, to the point where there are multiple open anti-trust lawsuits. For example: https://www.justice.gov/opa/pr/justice-department-files-anti...

Basically, if you don't play the Realtor game and agree to pay those commissions, it's difficult to participate in the market at large.

Re: Compass S-1

#47

Post by boh »

bostonsre wrote: post #39
boh wrote: post #20

Earlier quoted context omitted.

There's no case to be made that "super control" inherently leads to unethical behavior. It may, however, negatively impact the stock price, since less investors will likely want to invest in a company with limited controls on governance. Most companies aren't Facebook and don't have Facebook growth, so ignoring them is an option.

Why is there no case to be made? It would be interesting for someone to investigate if it hasn't been already. I'm curious if that "absolute power corrupts absolutely" saying is just a saying or if it has a basis in reality. I can't recall many benevolent dictators for life from my history classes.

This comment is in reference to the voting rights attached to common shares. This would have likely not been covered in your history classes.

Re: Compass S-1

#48

Post by onethought »

nknealk wrote: post #11
twostorytower wrote: post #3

$270M loss on $3.7B in revenue. If they can get opex down, there's some serious money to be made and a lot of growth left here. In my neighborhood I'm seeing more and more houses go up for sale with Compass signs.

Their single biggest expense is “commission and other transaction related expenses” which clocks in at just over 3B. I don’t know how much control they really have over commissions.

Running realestate commissions through your books to pump your "revenue" seems a bit crappy... So really they have 700mil revenue.

Re: Compass S-1

#49

Post by wombat-man »

nrmitchi wrote: post #46
bostonsre wrote: post #37

Earlier quoted context omitted.

Why haven't commission percentages gone down over time? It seems like a massive margin that should be trimmed down by competition. I would think there would be more than enough room to under cut the standard rates, cover costs and still make a healthy profit. Is there a low supply of realtors that causes them to be in high demand and helps them keep up their commissions or something like that?

The National Association of Realtors controls a huge percentage of real estate transactions, and works to make sure it doesn't drop, to the point where there are multiple open anti-trust lawsuits. For example: https://www.justice.gov/opa/pr/justice-department-files-anti... Basically, if you don't play the Realtor game and agree to pay those commissions, it's difficult to participate in the market at large.

Yeah I mean you're kinda paying to make everything go smoother and ideally their experience in the market will help prevent you from making an expensive mistake. As long as you have a good one, of course.

Re: Compass S-1

#50

Post by matthewfcarlson »

I’ve been looking at houses lately and I don’t understand why I can’t get a predicted score on a house. They know what I want by the filters. Why can’t I filter by houses within a 10 minute drive of a grocery store and a public library (two things that are important to me).

I guess it’s a case of why not built it yourself.

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