Redfin
Redfin has another headwind in addition to the brutal environment for growth stocks as its core real estate brokerage service is seeing decelerating growth, while investors are concerned about the viability of its iBuying program.
Inside the Numbers
In Q4, Redfin reported a loss of $0.27 per share which was slightly better than expectations of a loss of $0.31 per share. It was also worse than last year's profit of $0.11 per share.
The company's revenue was up nearly 163% to reach $643 million which was also better than expectations. However, Redfin's stock was down as its revenue is coming from increased home sales while its core business is slowing rapidly.
Redfin's Q1 forecast was disappointing as the company sees a loss between $115 million and $125 million, more than what it lost in all of 2021. It also sees Q1 revenue between $535 million and $560 million. Analysts were forecasting a loss of $75 million. There is also skepticism about Redfin's iBuying business which most analysts don't see as a meaningful driver of future profitability.
Redfin also seems to be losing market share to Compass, especially on the costs and urban environments based on search traffic. It seems to be betting its company on iBuying which turned out to be a disaster for Zillow
One of the bearish criticisms of Redfin that rang hollow during its incredible ascent was that it was a simple real-estate, brokerage business that was undeservedly getting the multiples of a high-tech, growth stock.
This seems even more true now as the companies' revenue through iBuying is even lower margin than its real estate business. Recent trends are troubling for Redfin and only investors who believe in its management team should consider buying the stock.