Real es­tate bro­ker­age Redfin jumps in stock mar­ket de­but

Kuwait Times - - BUSINESS -

Shares in Redfin Corp soared in their stock mar­ket de­but Fri­day as in­vestors bet on the res­i­den­tial real es­tate bro­ker­age’s growth prospects de­spite a US hous­ing mar­ket that’s been ham­pered by a wors­en­ing short­age of prop­er­ties for sale. The stock climbed $6.70, or 44.7 per­cent, to close at $21.70. The gain came against a back­drop of mostly slug­gish trad­ing on Wall Street. The ma­jor US stock in­dexes ended mostly lower.

Seat­tle-based Redfin priced its ini­tial pub­lic of­fer­ing of about 9.2 mil­lion shares at $15 each. That was above the max­i­mum of­fer­ing price of $14 per share that the com­pany listed when it filed plans to go pub­lic in June. “They’re a dis­count real es­tate bro­ker with a tech­nol­ogy edge, so they’re a dis­rup­tor, and grow­ing faster than other bro­kers in the in­dus­try,” said Kath­leen Smith, a prin­ci­pal at Re­nais­sance Cap­i­tal, which man­ages IPO-fo­cused ex­change-traded funds. “And they’re gain­ing mar­ket share, which is what’s in­ter­ested in­vestors.”

The com­pany, which launched in 2002 and adopted the Redfin name in 2006, pro­vides listings of homes for sale on­line and via a mo­bile app where users can search for prop­er­ties and find in­for­ma­tion on pric­ing trends, neigh­bor­hood data and other de­tails. Redfin also em­ploys agents to work with buy­ers and sell­ers in more than 80 US mar­kets. The com­pany says it charges most home sell­ers a com­mis­sion of 1 per­cent to 1.5 per­cent, com­pared to up to 3 per­cent charged by tra­di­tional bro­ker­ages. While the com­pany’s rev­enue has been ris­ing, it has booked con­sec­u­tive an­nual losses go­ing back to 2014.

For the three months ended in March, Redfin’s loss widened to $28.1 mil­lion, com­pared with a loss of $24.3 mil­lion a year earlier. Rev­enue jumped 44 per­cent to $59.9 mil­lion.

Like other real es­tate bro­ker­ages, Redfin has had to con­tend with the im­pact of a hous­ing mar­ket that’s been ham­pered by a stub­bornly low in­ven­tory of homes for sale.

De­spite solid de­mand in a rel­a­tively healthy econ­omy for houses, sales listings na­tion­wide have been steadily de­clin­ing for more than two years. The re­sult­ing short­age has caused prices to con­sis­tently rise faster than wage gains, mak­ing it harder for more Amer­i­cans to build up their net worth by be­com­ing home­own­ers. “Our sales would have been higher if there would have been more in­ven­tory,” said CEO Glenn Kel­man. “All we can do is try to gain share in the face of that, which is ex­actly what we’ve done.”

Redfin is one of sev­eral real es­tate-sec­tor com­pa­nies to go pub­lic in the past decade as the na­tion’s hous­ing mar­ket re­bounded from the worst down­turn since the Great De­pres­sion.

Re/Max, a fran­chisor of real es­tate bro­ker­age ser­vices, made its mar­ket de­but in 2013. Real­ogy Hold­ings, which op­er­ates real es­tate bro­ker­ages un­der brands like Cen­tury 21, Cold­well Banker and Sotheby’s In­ter­na­tional Realty, de­buted a year earlier. On­line real es­tate in­for­ma­tion com­pany Zil­low Inc. be­gan sell­ing shares in 2011. Tru­lia Inc. went pub­lic in 2012 and agreed to be ac­quired by Zil­low two years later. Redfin be­gan trad­ing on the Nas­daq Global Se­lect Mar­ket un­der the “RDFN” ticker sym­bol. — AP

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