SPAC Takes Opendoor Public
The concentration of a handful of stocks, particularly technology, driving the market higher has been well documented.
Chamath Palihapitiya believes the flurry of new listings via mergers with special purpose acquisition companies (SPACs) will help a market that is increasingly concentrated to a few stocks.
While believing SPACs will help the breadth issue and actually putting money behind it are two different things, Palihapitiya is proving the latter as he announced the second company he'll take public through a merger with a SPAC.
Shares of Virgin Galactic, his first SPAC target, are up more than 40% since their public market debut last October, after rising more than 200% within the first few months of trading.
Palihapitiya's latest target is real estate startup Opendoor, which he calls "my next 10x idea." Opendoor, which operates an online marketplace for buying and selling houses, operates in 21 markets and sold more than 18,000 homes last year.
The $1 billion deal, which values Opendoor at $4.8 billion, will see Opendoor receive $414 million from the April IPO of Palihapitiya's SPAC, Social Capital Hedosophia II. Additional investors, including Palihapitiya and funds managed by BlackRock, will provide $600 million through a private investment in public equity.
The $4.8 billion valuation is approximately equal to Opendoor's 2019 revenues. The valuation marks a jump from the $3.5 billion pre-money valuation Opendoor had last March when it raised $300 million. Earlier investors in Opendoor include General Atlantic, SoftBank's Vision Fund and Lennar Corp.
"This is one of many milestones towards our mission and will help us accelerate the path towards building the digital one-stop-shop to move," said Opendoor founder Eric Wu, who will continue to lead the company.
For those who invest in this latest byproduct of the SPAC craze, they'll be hoping the returns follow a similar trajectory as Virgin Galactic did in its early days of trading.
Think Big. What’s the most valuable asset in the world? Gold? Nope. Tesla stock? Not until you-know-who stops tweeting. A penthouse overlooking Central Park? Close, but no cigar. It’s art. When a single painting can sell for $450,000,000, no other asset can match art when it comes to potential returns. That’s not a typo: blue-chip art has outperformed the S&P by 180% from 2000–2018 according to industry benchmarks. But the $1.7T art market has two huge problems:
1. Lack of data transparency
2. Incredibly high barrier to entry So what do you call it when one startup manages to solve both? We call it a great opportunity. Meet Masterworks, the first platform for investing in multimillion-dollar works by the likes of Kaws, Banksy, and more. The brainchild of serial tech entrepreneurs, they make navigating the world’s most exclusive asset class seamless and transparent. Why wait? Skip the 25,000 waitlist today.*
*See important info
SEC eyes Nikola. The U.S. Securities and Exchange Commission is looking into claims made by Hindenburg Research that Nikola misled investors such as by making false statements about its technology to secure partnerships with auto manufacturers. The SEC, which declined to comment, is reportedly looking into whether Nikola violated securities laws. However, Nikola said it "proactively contacted and briefed" the SEC about the report and "welcomes the SEC's involvement in this matter."
Apple takes on Peloton. Apple unveiled Apple Fitness Plus, a fitness streaming subscription offering guided workouts using the Apple Watch. The service allows you to watch workouts through an iPad, iPhone or Apple TV while syncing your health data from the watch to the screen. Fitness Plus costs $9.99 per month or $79 annually and will be available by the end of the year. Apple is offering three months for free with the purchase of an Apple Watch.
Lego searches for sustainable bricks. Lego will invest $400 million over the next three years to produce its bricks from sustainable materials as opposed to the oil-based plastic the company currently uses. Lego intends for its production to become carbon neutral by 2022, eliminate single-use plastic in packaging by 2025 and replace plastic bricks by the end of the decade. A team of more than 150 scientists and engineers has been testing new materials for the bricks over the last five years. "The difficulty is getting to where the bricks have the same colour, the same shine, the same sound," Lego vice president of environmental responsibility Tim Brooks said.
GM eyes the skies. General Motors is reportedly looking into the feasibility of the aerial taxi market and whether it should build "flying cars." CEO Mary Barra made the first reference to GM's ambitions on Monday, saying it fits well with electric vehicles and its Ultium advanced electric battery. "We believe strongly in our EV future and not just for vehicles," Barra said. "The strength and flexibility of our Ultium battery system opens doors," Barra said, before adding "including aerial mobility."
Hobby Lobby raises minimum wage. Hobby Lobby announced it will raise the minimum wage for its full-time employees to $17 per hour beginning October 1. Hobby Lobby last raised its minimum wage to $15 per hour in 2014. "Because this year has presented so many challenges to our employees, we are very happy that we are able to provide pay increases to thousands of our associates before the Christmas season," Hobby Lobby founder and CEO David Green said.