Shares of special purpose acquisition company (SPAC) Social Capital Hedosophia Holdings II (NYSE:IPOB) jumped by more than 20% when trading opened Tuesday, and were up by 18.7% as of 11:05 a.m. EDT. The jump occurred after the SPAC announced it was acquiring Opendoor, an online real estate marketplace.
Social Capital's founder, Chamath Palihapitiya, called Opendoor his "next 10x idea" in a CNBC interview.
Opendoor operates an online real estate marketplace in 21 U.S. cities. Founded in 2014, it set out to provide what it described as a "new, radically simple way to buy and sell your home." The company uses its valuation model to offer potential home-sellers a fair price that it will pay in cash, after which it becomes responsible for maintaining and reselling the home. Buyers can also use the company's fee-based service.
Social Capital merged with space-tourism company Virgin Galactic (NYSE:SPCE) using its initial blank-check company. So the SPAC has some notable experience with bringing companies public in what Palihapitiya calls "IPO 2.0."
The investment in Opendoor will consist of $414 million from Social Capital Hedosophia Holdings II, along with $600 million from another group of investors including Palihapitiya and funds managed by Blackrock (NYSE:BLK).
The new deal brings Opendoor's current valuation to $4.8 billion, which is approximately the same as its 2019 revenue, according to CNBC. Opendoor CEO and co-founder Eric Wu will continue to lead the company. The deal "will help us accelerate the path toward building the digital one-stop-shop to move," he said in a statement.