After the WeWork debacle, gambles on DoorDash and Opendoor appear to be paying off big time for SoftBank CEO Masayoshi Son. Could a Compass IPO be the fund’s next big win?
In early 2020, before the pandemic hit the U.S. and after a shelved WeWork IPO, SoftBank’s Vision Fund announced quarterly losses north of $2 billion and plans to scale-back its Vision Fund redux. A year later, riding the technology tailwinds of COVID-19, two of the company’s biggest investments are going public, and chatter of a third, from Compass, are swirling.
DoorDash announced Tuesday it was upsizing its Initial Public Offering (IPO) and pricing its stock for market debut at $102 per share but the price actually began trading at $182 per share at around 12:30 p.m., Wednesday. That put SoftBank’s $640 million investment in the company worth north of $11.4 billion.
Former Zillow CEO and co-founder Spencer Rascoff even criticized the decision to go the IPO route, rather than use a special purpose acquisition company (SPAC). Rascoff founded his own SPAC earlier this year and said, on Twitter, that DoorDash “left a massive amount of money on the table in its broken IPO.”
“Hopefully this debacle — whereby a huge amount of wealth was transferred from employees and early-stage investors over to hedge funds, thanks to the underpricing — will embolden Airbnb’s pricing committee to push bankers on price,” Rascoff added.
Opendoor is also set to go public in December. However, it will do so via a merger with Social Capital Hedosophia Holdings Corp. II, a SPAC.
The SoftBank Vision Fund owns roughly 73 million shares of Opendoor — which will amount to ownership of between 13.8 percent and 15 percent depending on different redemption scenarios post-merger.
The acquisition valued Opendoor at $4.8 billion — but the combined company’s enterprise value based on speculation of Social Capital’s publicly traded stock has skyrocketed the valuation even before the merger, more than doubling.
At the $27 share price at which Social Capital II was trading at around Noon, Wednesday — which, again, is before the official merger, which is scheduled for December 19 and the December 21 public listing as OPEN — SoftBank’s $400 million investment is currently worth roughly $1.97 billion.
SoftBank also figures to cash in on the inevitable initial public offering by real estate brokerage Compass. Compass, has reportedly already tapped financial institutions for a 2021 IPO.
SoftBank has led multiple funding rounds for Compass, although the size of its exact stake is currently unknown.
It was clear during the company’s most recent earnings report that the SoftBank Vision Fund had recovered sharply from the struggles it endured late last year and again in early 2020. In November, the company reported the first Vision Fund was back in profitable territory, with its initial $75 billion in investments worth $76.4 billion.
The Vision Fund segment of the business reported a net income of more than $6 billion in the second quarter of the fiscal year 2020, versus a loss of $6.7 billion in the same quarter a year earlier.