On Jan. 11, Dream Finders Homes revealed the terms for its IPO. The homebuilder plans to raise up to $144 million in the offering. The stock is set to debut on the Nasdaq under the ticker symbol “DFH.” So, is Dream Finders Homes IPO stock a good buy for investors?
Dream Finders Homes is a homebuilder in multiple growing metropolitan areas of the U.S. The company is offering 9.6 million shares in the price range of $12–$15 per share. It will likely be valued at over $1 billion in the offering. The real estate company plans to raise funds to finance its initiatives in high-growth markets.
Dream Finders Homes' IPO date and price
Dream Finders Homes hasn’t revealed an IPO date yet, but several reports suggest that it could come as early as this week. The company plans to offer 9.6 million Class A shares, which will likely be priced between $12 and $15 apiece. The expected IPO pricing date is Jan. 20.
BofA Securities, Builder Advisor Group, Zelman Partners, RBC Capital Markets, BTIG, TCB Capital Markets, and Wedbush Securities are the listed underwriters for the offering. The homebuilding company filed confidentially on October 13, 2020.
Dream Finders has an impressive estimated valuation
If the home construction company prices its IPO at the midpoint of the suggested range, Dream Finders Homes would have a market value of about $1.2 billion. The major homebuilders in the U.S. are PulteGroup, D. R. Horton, and Lennar. They have market capitalizations of $11.8 billion, $26 billion, and $23.9 billion, respectively.
How Dream Finders Homes makes money
Dream Finders Homes designs, builds, and sells homes in rapidly growing metropolitan areas including Jacksonville, Orlando, Denver, Charlotte, Raleigh, Austin, and Washington, D.C. The company has closed sales on over 9,100 homes since its inception in 2008.
The home construction company's net revenue rose 37 percent YoY in the first nine months of 2020 to $672.7 million. Dream Finders Homes reported a net income of $40.9 million in the first nine months of 2020 compared to a net income of $22.8 million in the first nine months of 2019.
Dream Finders’ IPO stock looks like a buy
Dream Finders has a significant market opportunity for new single-family housing in the company’s markets mainly in suburban Sunbelt regions. The company will likely benefit because interest rates are expected to remain at historically low levels for several more years.
The coronavirus pandemic is pushing some city-dwellers to relocate to suburban areas. Long-term investors should consider buying Dream Finders Homes stock. The company is well-positioned to take advantage of an out-migration from dense cities as customers prefer more space in their homes.
Patrick Zalupski is the founder and CEO of Dream Finders. He will retain voting rights by owning all of the Class B shares. Zalupski founded the real estate company in 2008, and it sold its first home in Jacksonville on January 1, 2009. The home construction company had 354 employees as of September 30, 2020.