RDFN Stock: Why This Real Estate Model Offers Investment Opportunity

RDFN stock

Shares in real estate might not seem all that interesting. However, when a company comes along that is trying to change a dated model, then everything changes. Small-cap play Redfin (NASDAQ:RDFN) is on the radar for that reason. RDFN stock has skyrocketed in 2019 thanks to the company’s new approach to house selling.

RDFN Stock: One to Watch

The usual business of house-selling has sellers paying a significant percentage of the value of their house to the real estate agents.

But Redfin is changing that model. By operating solely on the internet, and by employing salaried agents, it can keep operational expenses at a minimum. This, in turn, means it can charge as little as 1% on the sale price of a house. A typical seller charges 3%, so Redfin is undercutting the market by two-thirds.

It’s not only advantageous for sellers; by offering buyers a commission refund of roughly $1,700 on average, homebuyers can also save by using Redfin.

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Business is Booming, and So is RDFN Stock

As you can imagine, the chance to save massive sums of money has meant that business has started to boom and, as such, the company has seen its US market share grow. It now accounts for 0.81% of the value of existing-home sales in 2018.

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The industry in the US has an entire estimated worth of $80 billion, so even a small percentage is incredibly lucrative. Investors should keep in mind how much growth is likely ahead for this small-cap company. With its share of this huge market still at less than 1%, there is ample room to grow.

The company is now expanding into other lucrative markets such as mortgages and title services.

The Takeaway

RDFN stock has grown 32% this year alone. It has corrected some of those gains, having been hit by wider-market fears brought on by the American/China trade war. But at $17.63 USD at present, shares currently trade for roughly 17.5% over the company’s July 2017 IPO price of $15. Redfin’s $1.6 billion market cap also significantly underrates its massive growth potential.

What are your thoughts? Are you watching RDFN stock?

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