Compass brokers who invested within the brokerage forward of its hotly anticipated IPO a yr in the past can lament the 70 % plunge in its inventory value since then. CEO and co-founder Robert Riffkin has much more at stake.
Reffkin exuded optimism when Compass shares debuted at $18 final April, valuing the agency at $7 billion and his stake at greater than $460 million.
“That is what I anticipate would be the lowest valuation we’ll ever see,” he informed Forbes on the time.
Lower than a yr later, Compass shares have plunged 70 %, the agency has a market capitalization of $2.4 billion and Reffkin’s stake is now value lower than $150 million.
Reffkin, whom Forbes estimated was value greater than $500 million when the inventory debuted, holds about 6.6 % of the excellent shares and 49 % of its voting energy, based on a February SEC submitting. His fairness stake consists of two.3 % of Compass’ Class A inventory plus all its Class C shares.
It’s a troublesome lesson for the CEO, who co-founded Compass in 2012 and constructed it into one of many nation’s largest brokerages with 26,000 brokers throughout almost 70 markets. It additionally reveals that even a agency’s greatest cheerleaders can bear monetary ache when issues go south.
“I can sympathize with the emotional curler coaster trip of constructing an organization from concept to liquidity occasion coupled with all the guarantees and perils that brings with it,” stated David Friedman, co-founder of the wealth intelligence platform WealthQuotient.
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Reffkin, who purchased a 2,200-square-foot duplex penthouse in Tribeca for $16 million in 2020, just a few months earlier than the agency filed to go public, didn’t promote shares within the IPO and informed Forbes on the time that he didn’t plan to take action.
“I don’t assume I ever thought of promoting shares,” Reffkin stated within the April 2020 interview.
Lower than a yr later, on the brokerage’s fourth-quarter earnings name in February, Reffkin took the lengthy view on Compass’ mounting losses, affirming its continued pursuit of market share whereas acknowledging that free money movement is “the final word arbiter of economic success” and saying he expects the agency to be cash-flow optimistic by subsequent yr.
Compass declined to remark.
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