The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how real estate services stocks fared in Q1, starting with Redfin (NASDAQ: RDFN).
Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
The 13 real estate services stocks we track reported a satisfactory Q1. As a group, revenues beat analysts’ consensus estimates by 2% while next quarter’s revenue guidance was 0.9% below.
In light of this news, share prices of the companies have held steady as they are up 2.5% on average since the latest earnings results.
Redfin (NASDAQ: RDFN)
Founded by a former medical school student, electrical engineer, and Amazon data engineer, Redfin (NASDAQ: RDFN) is a real estate company offering brokerage services through an online platform.
Redfin reported revenues of $221 million, down 2% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ adjusted operating income estimates but a miss of analysts’ partner transactions estimates.
"Redfin profits were at the high end of the guidance we gave investors in our last earnings call," said Redfin CEO Glenn Kelman.
Interestingly, the stock is up 17.4% since reporting and currently trades at $10.37.
Is now the time to buy Redfin? Access our full analysis of the earnings results here, it’s free.
Best Q1: The Real Brokerage (NASDAQ: REAX)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ: REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.
The Real Brokerage reported revenues of $354 million, up 76.3% year on year, outperforming analysts’ expectations by 6.3%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
The Real Brokerage scored the fastest revenue growth among its peers. The market seems content with the results as the stock is up 1.1% since reporting. It currently trades at $4.51.
Is now the time to buy The Real Brokerage? Access our full analysis of the earnings results here, it’s free.
Weakest Q1: eXp World (NASDAQ: EXPI)
Founded in 2009, eXp World (NASDAQ: EXPI) is a real estate company known for its virtual, cloud-based approach to real estate brokerage.
eXp World reported revenues of $954.9 million, up 1.3% year on year, falling short of analysts’ expectations by 4%. It was a disappointing quarter as it posted a significant miss of analysts’ adjusted operating income estimates.
As expected, the stock is down 8.1% since the results and currently trades at $7.97.
Read our full analysis of eXp World’s results here.
Compass (NYSE: COMP)
Fueled by its mission to replace the "paper-driven, antiquated workflow" of buying a house, Compass (NYSE: COMP) is a digital-first company operating a residential real estate brokerage in the United States.
Compass reported revenues of $1.36 billion, up 28.7% year on year. This result missed analysts’ expectations by 4.6%. It was a softer quarter as it also produced a significant miss of analysts’ adjusted operating income and EPS estimates.
Compass had the weakest performance against analyst estimates among its peers. The stock is down 21.4% since reporting and currently trades at $6.06.
Read our full, actionable report on Compass here, it’s free.
Opendoor (NASDAQ: OPEN)
Founded by real estate guru Eric Wu, Opendoor (NASDAQ: OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.
Opendoor reported revenues of $1.15 billion, down 2.4% year on year. This print beat analysts’ expectations by 9.3%. Overall, it was an exceptional quarter as it also produced EBITDA guidance for next quarter exceeding analysts’ expectations.
Opendoor scored the biggest analyst estimates beat among its peers. The stock is up 3.5% since reporting and currently trades at $0.73.
Read our full, actionable report on Opendoor here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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