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As Compass’ IPO Lockup Ends, Firm Announces New Acquisition

Compass CEO Robert Reffkin (Getty)

Compass announced yet another acquisition of a title and escrow company, just as restrictions are lifted on trading of about 200 million more shares.

The brokerage has signed an agreement to buy CommonGround Abstract, a title company operating in New Jersey and Pennsylvania, by the end of the year. The terms of the purchase were not disclosed.

It’s the third such deal in as many weeks and means Compass is now offering title and escrow services in 10 states. Last week, the brokerage announced its acquisition of Denver-based First Alliance Title and the week before it was Dallas-based LegacyTexas Title.

The news comes on the day that restrictions end on trading of about 200 million shares from Compass’ initial public offering. The shares, which was subject to a 180-day lockup period, are now free to be publicly traded.

The sudden surge in tradable shares will likely mean a price drop today. What happens next is less clear. Analysts bullish on Compass’ rapid growth business model expect the stock to eventually rally. Critics of the company’s strategy predict further declines.

Analysts will be paying special attention to whether any Compass executives, board members and biggest shareholders sell an indication of lack of belief in the company’s prospects.

Softbank owns about a third of the brokerage with more than 132 million Compass shares, according to Yahoo Finance. The second largest holder is Discovery Capital Management, with 33.6 million shares or almost 9 percent of the company.

Softbank, the major global tech investor based in Japan, has been selling off large stakes worth more than $2 billion in Doordash and Uber since July via block trades.

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