Portland-based Vacasa made its debut on the Nasdaq as a public company on Tuesday. The vacation rental giant went public by merging with a “blank-check” company that was already publicly traded.

“We’re extremely excited. It’s a huge landmark for Vacasa,” chief financial officer Jamie Cohen said.

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Shares dropped more than 10% on opening day, closing at $9.84.

The Portland-based vacation rental company Vacasa made its debut as a public company on the Nasdaq.

The Portland-based vacation rental company Vacasa made its debut as a public company on the Nasdaq.

Courtesty of Vacasa

The deal assigned Vacasa an enterprise — or total — value of nearly $4 billion. On Tuesday morning, Vacasa said its market value was higher — roughly $4.4 billion. Market values change as stocks are bought and sold.

Here are five things to know about the newly public company, Vacasa Inc.

Vacasa isn’t profitable, but it is worth a lot of money

Vacasa manages a portfolio of some 35,000 vacation rentals.

The company has lost money every year since its inception, according to regulatory filings. But after weathering the pandemic’s initial blow, it enjoyed a surge in home-weary folks seeking short-term rentals. Last quarter Vacasa had record revenue of $330 million, up 77% from the year before. It expects to bring in $100 million more this year than previously forecast.

Vacasa is still losing money but is trimming its losses.

And it’s now one of the state’s most highly valued public companies, trading under the ticker symbol VCSA.

Cohen said only about 10% of the company’s shares are publicly floated, or available for investors to trade. Vacasa’s existing shareholders are holding onto their equity, including Eric Breon, who founded the company in 2009.

Vacasa didn’t go public the traditional way

Vacasa was taken public by another company — an investment vehicle that can go by many names: Blank-check company. Shell company. Or special purpose acquisition company (SPAC).

In a SPAC deal, investors buy shares in a shell company that goes public and then look for a private business to merge with and take public too. Vacasa, the private company, became public by combining with TPG Pace Solutions, which was essentially a shell with a pot of cash.

SPAC deals exploded in popularity in late 2020 and early 2021, promising a quicker, less burdensome route to capital than a traditional IPO, or initial public offering. But some research suggests SPAC investors pay a price in the process.

Vacasa received a lot less money than it hoped for

When Vacasa announced this summer that it was going public, the company said it would get up to $485 million in cash proceeds to grow the business.

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That didn’t happen. Instead, Vacasa is getting about $340 million. That’s $40 million more than the minimum required to close the deal.

Here’s how the other $145 million evaporated: When investors buy shares in a blank-check company such as TPG Pace Solutions, they don’t know which private company it will ultimately target. So, they have an eleventh-hour chance to back out and redeem their shares, plus interest.

Paying out those shares drains cash from the merger pot — and reduces how much companies such as Vacasa get paid.

Some companies going public through SPAC deals recently have suffered high investor withdrawals, including the media company Buzzfeed. Shareholder defections drained about $270 million in cash from that deal.

As a private company, Vacasa had already raised hundreds of millions of dollars in prior funding rounds. And Cohen, the chief financial officer, said the money raised in the merger was enough.

“We’re really well-capitalized now and have plenty of money on the balance sheet to go and invest for continued growth,” she said.

Vacasa will use that money to continue doing what it’s doing...

… namely, investing in technology and adding new properties to its portfolio.

“If you look just at the United States, there’s more than five million vacation homes,” Cohen said. “Vacasa has about 35,000 on our platform today. So, we’re less than 1% penetrated.”

Vacasa adds properties in two ways — either by wooing clients individually or by scooping up the portfolios of smaller property management companies. Cohen said Vacasa has bought more than 200 such property managers, including more than 20 during the first nine months of this year.

This spring, Vacasa bought the operations of Austin-based TurnKey Vacation rentals for $619 million — mostly in stock, according to recent regulatory filings.

Critics accuse Vacasa of being too aggressive in its pursuit of properties.

Earlier this year, Bend-based Meredith Lodging sued Vacasa, alleging the larger company conducted a smear campaign to damage its reputation and lure away clients.

A federal judge dismissed the suit in November.

Vacasa expects to break even in 2023

That’s “adjusted EBITDA break even” for the finance wonks. Cohen said she expects the basic operations of the business to break even next year.

The emergence of the omicron variant of COVID-19 doesn’t seem to rattle Vacasa.

Cohen said at least one-fifth of people staying in vacation rentals did so for the first time during the pandemic. And then, there’s the rise in remote work.

“This is something that we believe is here to stay,” Cohen said. “And is resulting in people taking more vacations and taking longer vacations.”

That’s something the company is banking on, as the short-term rental industry continues to consolidate.

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