Why Compass Stock Popped Today
Key Points
The real estate brokerage topped its own expectations in the fourth quarter.
It also announced a $750 million convertible debt offering.
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Shares of Compass (NYSE: COMP) were pointing north today, moving higher after the company announced a $750 million convertible senior notes offering and gave a positive update on its guidance.
As of 11:39 a.m. ET, the stock was up 13.9% on the news.
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What it means for Compass
In a filing this morning, Compass said that it expected fourth-quarter revenue to be at the high end of its previous guidance of $1.59 billion-$1.69 billion, and for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be at or slightly above the high end of its guidance of $35 million-$49 million.
Additionally, it said it added 800 agents in the quarter, a sign it's continuing to grow operationally as well.
Debt raises typically are seen as a negative by investors, but investors seemed to be willing to overlook that, given the improved guidance. Compass said it would use the funds, which represent more than 10% of its market cap, for general corporate purposes and to fund its acquisition of Anywhere Real Estate.
What's next for Compass
Compass had a surprisingly strong 2025, despite the weakness in the housing market, a sign its recent tech investments are paying off. The acquisition of Anywhere will nearly double the size of Compass, showing that the company remains focused on growth, even as it's already the largest brokerage based on transaction volume.
There are signs that the housing market could be on the mend in 2026, which would be a tailwind for Compass as well. The real estate stock has been largely ignored, but the breakout could continue this year.
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Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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