Real estate broker Compass closes Anywhere merger. What does this mean for the stock?

Real estate broker Compass has evolved from a local startup into a company with a market capitalization of nearly $10 billion, offering a new approach to home sales based on the gradual release of listings from exclusive access into the open market. In January, Compass closed a merger with peer Anywhere Real Estate. The combined brokerage will control nearly 20% of U.S. home sales. Analysts believe the transaction could support Compass’ market position and share price, despite antitrust risks and persisting uncertainty around the housing market.

Compass, a U.S. residential real estate brokerage, was founded in 2012 by its current CEO, Robert Reffkin. The company was initially conceived as an alternative to traditional brokers in the rental housing segment. Over time, however, Compass shifted to a conventional residential sales model, while positioning technology as its core competitive advantage.

Compass has expanded aggressively with the support of venture capital. A key backer was the SoftBank Vision Fund, which invested $450 million in the company in 2017. In 2018, Compass raised an additional $400 million, with participation from the Vision Fund, Qatar Investment Authority, Wellington, IVP, and Fidelity. These funding rounds brought total capital raised to nearly $1.2 billion. The company also pursued growth through acquisitions of brokerage and service firms, supporting transaction and revenue growth. For years, this expansion was financed primarily with investor capital, despite persistent losses.

In April 2021, Compass completed an IPO, though the results proved weaker than initially expected. Instead of the planned $936 million, the company raised about $450 million, pricing shares at $18 apiece, below the indicated $23-26 per share range. Compass shares are currently trading about 36% below the IPO price. After the offering, Reffkin told CNN Business: "we now have hundreds of millions of dollars that have been infused into the company to help accelerate our investment in the platform."

From the outset, Compass pursued rapid expansion, actively recruiting agents from peers. This strategy triggered a series of lawsuits from other market players, who accused the company of unlawful poaching and misuse of proprietary information. Among the plaintiffs was Anywhere Real Estate, the franchisor of Century 21, Coldwell Banker, Corcoran, and Sotheby’s International Realty. That dispute was settled out of court earlier this year, as were other related proceedings. Compass’ combined costs related to the conflict with Anywhere Real Estate amounted to about $10.5 million.

Compass also spent several years in litigation with Avi Dorfman, Reffkin’s former business partner, who claimed he had not been recognized as a cofounder and had been deprived of his stake in the company. Dorfman was ultimately officially recognized as a cofounder. The financial terms of the settlement were not disclosed, but Compass reported legal expenses of $21.3 million in its 2021 annual report.

Compass has been criticized for the high costs associated with attracting and retaining agents. Bonuses, marketing spending, and various subsidies became a focal point of debate in the real estate industry, with peers questioning the sustainability of the model and characterizing it as closer to a charity than a viable business.

In 2024, Compass stepped up competition by promoting an alternative to the traditional real estate sales model. Instead of immediately distributing listings as broadly as possible, in line with the National Association of Realtors (NAR) framework, the company introduced a staged approach. Under this model, properties are first made available exclusively to Compass agents and clients. If no buyer emerges, the listing appears on Compass’ website, but without full public access to details. Only at the final stage, if demand remains insufficient, is the listing released to the open market.

Compass’ limited-listings tactic has drawn resistance from competitors. In the summer, real estate marketplace Zillow began blocking certain Compass listings that were not entered into the shared database within one day of the start of public marketing, citing NAR rules. The dispute has moved to federal court, with a ruling still pending. Wall Street analysts are closely monitoring the case. In November, Oppenheimer analysts led by Jason Helfstein said they remain optimistic about the success of Compass’ three-phase marketing, despite the opposition from Zillow.

On January 9, Compass announced the completion of its $1.6 billion merger with broker Anywhere Real Estate, a transaction that had previously been expected to close no earlier than the second half of 2026. Compass shares rose 4.7% on the day of the announcement. According to RealTrends, the deal combined the first- and second-largest brokerages by sales volume in 2024, the Wall Street Journal wrote. The combined business will operate under the Compass International Holdings brand and be led by Reffkin.

Barclays analysts, in a report dated January 7 and seen by Oninvest, described the accelerated closing of the deal as a “positive surprise” and said Compass appears positioned to actively expand its presence in brokerage services. The Journal noted that the transaction had faced the risk of an antitrust investigation, which has not been initiated at this point, though regulators could still intervene if competition concerns arise.

The merged company will control nearly 20% of U.S. home sales volume, according to the WSJ. Mergers that result in control of more than 30% of a market are typically viewed as potentially illegal. In several large metropolitan areas, including Chicago, New York, and San Francisco, the combined company’s market share will exceed 30%, the paper wrote, citing a report by analytics firm Capstone.

Alongside the merger approval, Compass announced a $750 million convertible bond offering. The proceeds will be used to refinance Anywhere’s debt and cover merger-related expenses.

UBS analysts said investor attention will now shift to Compass’ integration efforts, consolidation of IT systems, and realization of cost synergies. Earlier, the company raised its cost savings target from $225 million to more than $300 million, equivalent to about 11% of the combined company’s total expenses. UBS believes this target is achievable through cost reductions and optimization of technology investments.

Analysts at Barclays and UBS were encouraged by Compass’ updated guidance for the fourth quarter of 2025. The company expects revenue at the upper end of the $1.59-1.69 billion range and adjusted EBITDA at or above the upper end of the $35-49 million range. Wells Fargo, however, describes the outlook as mixed. The bank expects Compass to increase commission splits and expand agent headcount faster than the market, but warned that increasing commissions will prove challenging.

The U.S. real estate market has begun to show tentative signs of recovery. Home sales in December 2025 rose 5.1% year over year, marking the largest monthly increase in nearly two years. The rebound was driven by lower mortgage rates and slower home price growth. As a result, December sales reached their highest level since February 2023, the WSJ reported. Economists expect home sales to rise this year as affordability improves and some buyers and sellers decide against further delays. Inventory is also gradually increasing.

In the third quarter of 2025, Compass’ revenue rose 23.6% year over year to $1.85 billion, while the net loss widened 2.7 times to $4.6 million. The company said that excluding $7.5 million in merger-related costs tied to Anywhere, it would have reported net income of $2.9 million, which would have been an improvement on the $4.6 million in the same quarter last year. Following the earnings release, Compass shares climbed 4.95% to $8.20 apiece.

Since the beginning of 2026, Compass shares are up 23.5%. Eight Wall Street analysts rate the stock “buy,” while three recommend “hold.” The average target price stands at $13.90 per share, implying upside of about 7% versus the close on Wednesday, January 28. The most bullish valuation on Wall Street entails upside of roughly 30%.