Redfin stock tanks after forecast shows losses expanding as iBuying business grows

Redfin Corp. shares plunged more than 10% in after-hours trading Thursday, after executives predicted losses in the first quarter of 2022 would exceed full-year losses in 2021 as the company maintains an iBuying business that a rival dropped.

The real-estate services company reported a fourth-quarter loss of $27 million, or 27 cents a share on Thursday, after recording a profit of 11 cents a share in the same quarter a year ago. Revenue more than doubled from the year before, to $643.1 million from $244.5 million, and easily topped analysts’ expectations.

Analysts on average expected Redfin to report losses of 31 cents a share on sales of $599 million, according to FactSet. Redfin
shares, however, dove to less than $26 in the extended session, after closing with a 6.1% loss at $28.64.

The decline was likely tied to Redfin’s forecast, which called for a first-quarter loss of $115 million to $125 million, more than the company lost in the entire 2021 calendar year, $109.6 million. Last year in the first quarter, historically the slowest quarter for the company on both the top and bottom lines, Redfin lost $38.1 million, and analysts on average were expecting a loss of $75 million heading into the print.

Redfin executives guided for first-quarter revenue of $535 million to $560 million, with the bulk coming from its “Properties” division, which they expect to collect $330 million to $350 million in revenue. That division, which is almost entirely made up of iBuying, produced record revenue of $377.1 million in the quarter, up from less than $40 million in the fourth quarter of 2020.

Redfin has maintained an iBuying business, which flips homes and tends to boost revenue while being a drag on the bottom line. Rival Zillow Inc.
decided to drop its iBuying business after buying thousands of homes that were underwater last year.

Opinion: Zillow thought it could rule the housing market. It was very wrong.

Redfin Chief…


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