Chamath Palihapitiya unveils $4.8 billion SPAC deal for real estate startup Opendoor

Chamath Palihapitiya unveils $4.8 billion SPAC deal for real estate startup Opendoor
Buying Real Estate

Chamath Palihapitiya’s SPAC Social Capital Hedosophia II will acquire Opendoor, an online marketplace for buying and selling houses. Palihapitiya joins “Squawk Box” to discuss his vision for the deal. For access to live and exclusive video from CNBC subscribe to CNBC PRO:

Chamath Palihapitiya pioneered taking private unicorns public by reverse merging them into special purpose acquisition companies — an idea he’s called “IPO 2.0.”

After his first iteration of doing so last year with space-tourism company Virgin Galactic, he’s found his next target: Opendoor, an online marketplace for buying and selling houses.

“These guys are my next 10x idea,” Palihapitiya said in an interview with CNBC, noting the prospect of generating returns worth 10 times the original investment.

The investment, announced Tuesday, amounts to more than $1 billion. Opendoor will receive $414 million from the capital generated from the April initial public offering of his SPAC, Social Capital Hedosophia II. Additionally, a group of investors, including Palihapitiya and funds managed by BlackRock, agreed to infuse another $600 million through a PIPE, or a private investment in public equity.

The deal values Opendoor at $4.8 billion — nearly equal to its 2019 revenue. The company’s earlier investors 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,” Eric Wu, who founded Opendoor six years ago, said in a statement. Wu will continue to lead the company, while Adam Bain, former chief operating officer at Twitter and director at Social Capital Hedosophia II, will join the board after the transaction is completed.

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  1. interesting to think about Opendoor from a game theory perspective… if the buyer [at scale] has perfect information about the real estate it seeks to buy, is that what I would want as a seller? prob not. I want an unsophisticated buyer! I do not want a buyer that is perfectly rational, vis a vis offer amount. Is that not the end game that Opendoor embodies?

  2. Not sure what all the negs are about. Chamath is right on. Buying and selling houses really sucks. I mean, it really really sucks. It’s stupid complicated, unnecessarily expensive, super high stress, and over-burdened with parasitic fee-stealers — so pretty much everyone hates the process. If OpenDoor streamlines the crapola and eliminates the excessive headaches and gets rid of the stupid-high costs, it’ll be a huge winner. No listings. No showings. No offers and counter-offers. No offer fall-throughs. No 6% agency fees. No contingent on financing. No carrying two mortgages. Sheesh, sounds good to me . . .

    It makes a ton of sense to move strongly into real estate market that is starved for innovation, and the timing couldn’t be better. I hope he succeeds — I’d love to sell a house without going through a blood-sucking crooked real estate agency. And screw the banks and their stupid “closing costs.”

  3. I think this sounds like it'll be disruptive, especially at a time when sadly lots of people may want to sell fast, or on the positive if they can afford it buy fast. I wonder if surveys are carried out on the property in case of issues?

  4. What is going with these SPAC. It is all over the place, a true hype. I am feeling like the big guy have find a money machine but we the little guy does'nt get the ticket for the party. UNFAIR!!! RIGGED

  5. These past weeks the stock market has been in a downward position, causing losses but i have been able to make sizeable profits all thanks to my broker Mr Charles Connor. A colleague of mine introduced me to him and to be honest, he has really been of a great financial guide to me, i was going through financial hurdles before i started investing with Charles.

  6. I'm on the fence on this company. I'm up 60%+ on IPOB so very happy so far whether I sell or hold as part of the speculative 5% of my portfolio (also includes IPOC, GBTC and Virgin Galactic). My experience with a similar company but for cars was their price was 40% lower than the price I was able to sell on my own. Housing is a bit different but it still needs to be convincing economically from a consumer's perspective.

  7. "…and pass all those savings on to you" Yeah right, that's why all tech monopolies have such high valuations….if you look at all the investor material it justifies the huge losses now with an absolutely insane future monopoly profit based on TAM and ignoring the risk of being the biggest residential RE owner in any market it dominates.

  8. As an investor who likes to invest in early growth companies I really appreciate this SPAC wave. Sick of massive unicorns where only the rich get to participate and ppl with less $$ ,who are willing to do the dd may get a big 10x+ winner, are locked out.

  9. Open door has a billion dollars in cash, to do a lotto damage to Redfin and Zillow, long Redfin and Long IPOB.
    This was an informercial to the piggies.
    I predict zillow gets acquired in 6 months

  10. Please guys, I've been trading the Crypto asset "Bitcoins" for the past two months and I've made so much loss, I really have no idea on how to make money on Bitcoins, can anyone please help me?

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