What Happened?
Shares of real estate technology company Redfin (NASDAQ:RDFN) fell 27.6% in the afternoon session after the company reported weak third-quarter earnings, which fell short of Wall Street's expectations. The number of brokerage transactions missed, and EBITDA fell short of Wall Street's estimates. The challenging operating environment, characterized by fluctuating mortgage rates and aggressive competitor ad spending, further weakened the performance. As a result, EBITDA guidance came in below expectations, throwing some cold water on the solid revenue guide. Overall, this was a weaker quarter.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Redfin? Access our full analysis report here, it’s free.
What The Market Is Telling Us
Redfin’s shares are extremely volatile and have had 69 moves greater than 5% over the last year. But moves this big are rare even for Redfin and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock gained 10.4% on the news that B. Riley Securities analyst Naved Khan upgraded the stock's rating from Neutral to Buy. The analyst added, "While buy-side agent commissions may get pressured industry-wide, we find Redfin well-positioned for volume gains."
Redfin is down 2.5% since the beginning of the year, and at $9.65 per share, it is trading 33.2% below its 52-week high of $14.45 from September 2024. Investors who bought $1,000 worth of Redfin’s shares 5 years ago would now be looking at an investment worth $477.96.
Today’s young investors won’t have read the timeless lessons in Gorilla Game: Picking Winners In High Technology because it was written more than 20 years ago when Microsoft and Apple were first establishing their supremacy. But if we apply the same principles, then enterprise software stocks leveraging their own generative AI capabilities may well be the Gorillas of the future. So, in that spirit, we are excited to present our Special Free Report on a profitable, fast-growing enterprise software stock that is already riding the automation wave and looking to catch the generative AI next.
