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Redfin dropped but still exceeded analyst expectations

Written by Customer Service on . Posted in Public Companies.

Its business model revolves in having sellers paying Redfin a fee, about 1 or 1.5%, to list the sellers home, which is a big discount compared to other competition’s rates.

Last May 6, Redfin’s shares started to drop after the company posted their first quarter earnings report which reflects strong revenue growth. Though the company was called out for missing the targets on the bottom-line losses, resulting to being guided to bigger losses on the second quarter. Redfin stock market value dropped by 17.6% on May 6.

A housing boom was experienced on the first quarter of 2021, reflecting positive outlook of Americans about the vaccine rollout and pandemic recovery. Amidst this, Redfin was able to deliver a top-line growth with its revenue recording 40% increase to $268 million, which exceeded the expected $253.3 million by analysts.

The gross profit also reflects that the company is gaining grounds and leverage, since the movement is more than triple of its previous value which is now at $42 million. The company’s market shares even rose to 1.14% of U.S. existing house sales, showing positive progress. The only this it missed was the loss per share, which they had goaled to $0.34, but only moved from $0.64 to $0.37.

The company’s second quarter performance, which means that the company’s performance as it dwells with the changes from economic recovery, is expected to get a revenue growth ranging from 109% to 114% or about $446 million to $457 million, which is still above the estimated $348.4 million.

This includes the guidance in revenue from RentPath, a company that was acquired last April that focuses on rental-listing, which is about $41 to $42 million. The bad news is that the company anticipates a net loss expansion, from the expected $7 million to about $32 million to $38 million. These values also include the guidance from RentPath of about $9 million to $10 million.

All in all, the forecasted loss along with the shift of investors away from growth stocks pulled the Redfin stocks down.

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