Investors Respond to Dream Finders Homes Initial Public Offering

Since its launch on the market late last week, the home builder IPO is surprising some investors.

Last week [from January 27, 2021], Jacksonville, Florida–based Dream Finders Homes announced the price of its initial public offering (IPO) of 9.6 million shares of Class A common stock at the price of $13 per share. Under the symbol “DFH,” the stock of the newly public company began trading on the Nasdaq Global Select Market on Jan. 21.

Out of the gate, the market responded positively, with shares rising as much as 65%. The stock opened at $19.51, hit a high of $21.49, and shares ended at $20.95 on the first day, up 61.2%, according to MarketWatch.

“Clearly the fact that the IPO priced at $13 and immediately traded above $20 shows that there is a healthy appetite within the investment community for home building–related stocks,” says Drew Mackintosh, principal and founder of Mackintosh Investor Relations.

Anthony McGill, managing director, head of investment banking at Zelman & Associates, agrees and says this is “the deal of the industry.” It's the first home builder IPO since June 2014 with Century Communities. Plus, he says, “It is the first IPO this cycle to come to market at valuation multiples approximating NVR, which is really a huge thing.”

Jacksonville Daily Record contributing writer Mark Basch wrote in his recent article, “not only is Dream Finders selling its stock in a strong market for its industry, but IPOs in general have been surging. Major stock market indexes have reached record highs recently, but stocks of home builders are doing even better than the overall market.”

McGill contributes the IPO’s success to "the company's growth path and their emphasis on being land light and resulting in high return on equity.” In addition, “the company felt strongly about the appropriate valuation because they are growing so fast, and they refused to accept the established paradigm of small cap home builders,” he continues.

DFH expects to receive gross proceeds from the offering of approximately $124.8 million, before deducting underwriting discounts and expenses, and will use the net proceeds to repay all borrowings under its existing secured vertical construction lines of credit facilities.

“Our initial public offering is a tremendous accomplishment for Dream Finders Homes,” says Patrick Zalupski, founder, CEO, and president of Dream Finder Homes. “We are very appreciative of the hard work of our employees over the years to get us to this point, and we are extremely proud of this achievement and believe it is a great step forward for the long-term value of the company.”