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Redfin shares hit record low
Redfin’s tough year grew even tougher on Monday when an analyst downgraded its stock, citing doubts about its business model and sending its share price to a record low.
Days before of the discount brokerage’s third-quarter earnings release, Oppenheimer analyst Jason Helfstein cut his recommendation from a hold-equivalent rating to an underperform, Bloomberg reported. Helfstein also lowered his price target all the way down to $1.30, essentially advising investors to sell before things get worse.
Redfin’s stock hit an all-time low of $3.32 by midday before rebounding slightly to $3.63 when the markets closed. Its shares have lost more than 90 percent of their value since the start of the year. The company is due to report its third-quarter earnings on Wednesday.
In the second quarter, Redfin reported a net loss of $78.1 million, compared to a net loss of $27.9 million in last year’s second quarter.
At the time, chief executive officer Glenn Kelman said the losses wouldn’t be “enough to sink our battleship” and expressed a belief that its properties division would earn a “significant gross profit for the full year.”
As recently as last year, Redfin was soaring. In February 2021, as its share price topped $95, the brokerage was looking to expand its agent count, hiring “faster than ever.”
But this year, as rising mortgage rates wreaked havoc on the housing market, things took a sharp turn. In June, Redfin announced it would be laying off around 470 employees, or approximately 8 percent of its workforce. Kelman referred to the layoffs as a “setback,” but said there would be no changes to how it compensates its agents, who earn salaries and bonuses based on closings, rather than a traditional commission structure.
