Chamath Palihapitiya announced today that his SPAC $IPOB
is merging with Opendoor, the real estate iBuying startup.
It will be a $4.8 billion deal that will merge Chamath's Social Capital Hedosophia Holdings II with Opendoor, giving Opendoor $1 billion in cash.
Opendoor 2019 revenue was $4.7 billion. Chamath thinks that by 2023 revenue can be $9.8 billion. Looking out even longer term, Chamath thinks that if Opendoor expands into more US markets and takes up just 4% market share, they will 10x their current revenues.
Here are Chamath's five tailwinds that make up his thesis:
1) In many cities, housing affordability is poor because of a big supply/demand imbalance and its driving Americans to relocate.
2) Federal elimination of SALT (state and local tax deductions) and decaying state budgets are creating higher taxes which motivate people to move.
3) Seventy-five million digitally-native millennials are beginning to start families and enter the housing market which will drive demand for buying homes.
4) Working from home is here to stay. As a result, people can make quality of life decisions and live where they want, even if it's simply moving from urban to suburban locations.
5) The Federal Reserve's view on interest rates will keep rates at or near zero for the foreseeable future. This will increase the buying power of the US homeowner to move/upgrade.
These tailwinds make Chamath believe that Opendoor will grow consistently year-over-year.