Housing broker Compass has finalized its merger with Anywhere. What does this mean for Compass stock?

Real estate broker Compass has gone from a local company to a business with a capitalization of about $10 billion, and offered a new look at the scheme of home sales - with a gradual withdrawal of objects from exclusive access to the open market. In January, Compass closed a merger deal with rival Anywhere Real Estate - as a result, the brokerage will control nearly 20% of U.S. home sales volume. Analysts believe the merger could support Compass' market position and share price despite antitrust risks and uncertainty in the housing market.

Compass (COMP), an American real estate brokerage company, was founded in 2012 by its current CEO, Robert Reffkin. Initially, the project was conceived as an alternative to traditional brokers in the rental housing market, but over time Compass has moved to a classic model of residential real estate sales, placing a bet on technological solutions.

Compass has been actively growing its business by attracting large venture capital investments. A key investor was SoftBank Vision Fund, which invested $450 million in 2017. In 2018, the company raised another $400 million with participation from SoftBank Vision Fund, Qatar Investment Authority, Wellington, IVP and Fidelity. These rounds brought the total amount of capital raised to close to $1.2 billion. Compass grew through active acquisitions of brokers and service companies, which supported deal and revenue growth. At the same time, the development was financed by raised capital from large investors, despite continuing losses.

In April 2021, Compass went public, but the parameters of the IPO turned out to be weaker than expected. Instead of the planned $936 million, the company raised about $450 million, placing shares at $18 - below the announced range of $23-26. Compass shares are now trading about 36% below the offering price. After the IPO, Reffkin told CNN Business that the company had raised "hundreds of millions of dollars" to accelerate investment in its technology platform.

From the beginning, Compass grew aggressively, actively poaching agents from competitors, which led to a series of lawsuits from other market players. The company was accused of illegally poaching employees and using commercial information. Anywhere Real Estate (franchisor of Century 21, Coldwell Banker, Corcoran and Sotheby's International Realty) was among the plaintiffs. But the dispute was settled out of court earlier this year, as were the other proceedings. Compass' combined costs for the conflict with Anywhere Real Estate totaled about $10.5 million.

Compass also spent several years suing Avi Dorfman, Reffkin's former partner, who claimed that he was not recognized as a co-founder and was stripped of his stake in the company. In the end, Dorfman was officially recognized as a co-founder. The financial terms of the settlement were not disclosed, but Compass listed legal expenses of $21.3 million in its 2021 annual report.

Compass was criticized for excessive costs of attracting and retaining agents - bonuses, marketing and subsidies became one of the most discussed topics in the real estate market. Competitors questioned the sustainability of this model, calling it more of a charity than a business.

In 2024, Compass intensified competition by offering an alternative to the traditional model of real estate sales. Instead of immediately placing properties on as many sites as possible, as prescribed by the National Association of Realtors (NAR) model, the company began promoting a staged scheme: first, the property is available only to Compass clients and agents. If no buyer is found, the object is published on the Compass website, but the details are not available to the general public. Only at the final stage, if there are no willing buyers, the information is released to the open market.

Compass's strategy of limited listings has sparked resistance from competitors. In the summer, real estate marketplace Zillow began blocking some Compass properties that were not listed in the common database within a day after the start of the public sale (NAR rules). The case has gone to court, with a decision pending. Wall Street analysts are following the developments: in November, Oppenheimer, led by Jason Helfstein, noted that they remain optimistic about the success of Compass' three-phase marketing strategy, despite Zillow's opposition.

On Jan. 9, Compass announced the completion of its $1.6 billion merger with broker Anywhere Real Estate, a deal previously not expected to close until the second half of 2026. Compass shares were up 4.7% on the day of the announcement. According to RealTrends, it combined the first and second-best-selling brokerages in 2024, the WSJ noted. The combined business will operate under the Compass International Holdings brand, led by Robert Reffkin.

Barclays analysts in their report dated January 7 (available in Oninvest) called the earlier completion of the deal a "positive surprise" and noted that Compass is ready to actively expand its presence in the brokerage services market. The Wall Street Journal notes that there was a threat of an antitrust investigation hanging over the deal, which has not been initiated yet, but it may be initiated in the future if the regulator sees risks to competition.

The merged company will control almost 20% of U.S. home sales, the WSJ writes. At the same time, mergers that give control over more than 30% of the market are considered potentially illegal. In some large agglomerations, including Chicago, New York and San Francisco, the share of the combined company will exceed 30%, points out WSJ, referring to a report of analytical company Capstone.

Simultaneously with the announcement of the approval of the deal, Compass announced a $750 million convertible bond offering. The funds are to be used to repay Anywhere's debt and cover merger costs.

UBS analysts note that now investors' attention will focus on Compass integration, consolidation of IT systems and realization of cost synergies. Earlier, the company raised its savings target from $225 million to more than $300 million (about 11% of the combined company's total expenses). UBS believes this target is achievable by reducing costs and optimizing technology investments.

Analysts at Barclays and UBS are encouraged by Compass' updated Q4 2025 guidance: the company expects revenue at the upper end of the $1.59 billion-$1.69 billion range and adjusted EBITDA at or above the upper end of the $35 million-$49 million range. However, Wells Fargo sees Compass' outlook as mixed. The company expects to increase its commission split and grow agent headcount faster than the market, but analysts caution, "While we see potential for inorganic growth through M&A, increasing commissions will prove challenging."

The U.S. real estate market began to show some signs of recovery: home sales in December 2025 jumped by 5.1%. This is the largest increase in almost two years: the impact of lower mortgage rates and a slowdown in home price growth. As a result, sales in December 2025 rose to the highest level since February 2023, WSJ noted. According to the publication, economists expect home sales to rise this year: affordability is improving, and some buyers and sellers are deciding not to postpone deals. In addition, the number of homes on the market is increasing.

In the third quarter of 2025, Compass' revenue grew 23.6% to $1.85 billion, but its net loss increased 2.7 times to $4.6 million. Compass explained that excluding merger costs with Anywhere ($7.5 million) would have yielded net income of $2.9 million - an increase of $4.6 million over the same period last year. Shares rose 4.95% to $8.2 after the quarterly report was released.

Since the beginning of 2026, Compass securities have risen in price by 23.5%. Now eight Wall Street analysts advise to buy Compass, three more - to hold. The average target price is $13.9, implying a potential upside of about 7% to the closing price on Jan. 28. Wall Street's most optimistic forecast suggests the stock could rise another 30%.