Disruptive stocks are often the ones that will return big. And in RDFN stock’s case, it is definitely disrupting the massive $31.8 trillion US housing market. In recent weeks, shares of the online real estate marketplace and brokerage, Redfin (NASDAQ:RDFN), have presented a buy-in opportunity.
RDFN Stock Disrupting the Housing Market
Stephens stock analyst John Campbell is bullish on RDFN stock, calling it and larger competitor Zillow (NASDAQ:ZG) “clear longs:”
“We believe that Redfin and Zillow stand out as the clear longs from the standpoint of real consumer-driven change.”
The analyst upgraded his rating of Redfin from “underweight” to “overweight” and set a price target of $23.
Who is Redfin?
This “consumer-driven change” is a result of Redfin’s online services that make the process of house selling faster, better, and cheaper. Its commissions are usually less than half a traditional brokerages, and further, according to analyst Jeremy Bowman, “it touts its customer-first approach, resulting in a Net Promoter Score that’s 49% higher than those of its competitors.”
Redfin has also added to its platform with programs such as RedfinNow and RedfinDirect. The former buys homes directly from sellers for a 7% fee and removes the hassle of selling, and the latter allows buyers to make offers without agents—reducing costs for the sellers.
Its services are in demand, and its name is spreading. Its share in the real estate market is steadily growing, and in its most recent quarter, it saw revenue jump 38% to $110 million. Its market share has grown from 0.73% to 0.83%.
RDFN Stock Falls
So why has stock suffered a massive decline recently? Currently, RDFN stock is selling for $17.77 USD per share—that’s a near 25% decline from April’s highs of $23.45 per share.
One concern remains: the company’s guidance for Q2 shows a bigger-than-expected loss, but that aside, its top-line growth remains impressive. Further, RDFN stock has struggled in the wake of a cooling US housing market.
However, there’s no doubt that Redfin is disrupting the real estate market. It is always worth considering a “game changer” because the likelihood of growth from Redfin’s current valuation of $1.5 billion is big.
What are your thoughts on RDFN stock?
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