Redfin’s stock drops on loss despite record rise in market share

Though Redfin saw a record increase in market share in the second quarter, a deepening loss had shaved $5 off its trading price at deadline Monday.

The net loss of nearly $28 million the company reported late last week had left its stock trading at near $56 per share by midday Monday, down from roughly $61 prior to its earnings release. Redfin recorded a net loss of $6.6 million a year ago and of $36 million in the first quarter of this year.

The losses in the second quarter of this year were largely attributed to the acquisition of RentPath, a deal which closed on April 2. The company expects RentPath to contribute $17 million in net losses in the third quarter.

However, Redfin’s $471 million in revenue did beat Yahoo Finance analyst estimates of $455 million to $460 million for the quarter, and its market share rose markedly to 1.18% from 0.94% a year earlier.

“Redfin gained more market share in the second quarter than at any point since our 2017 initial public offering,” CEO Glenn Kelman said in a press release.

Mortgages contributed to the company’s overall gain in revenue but showed signs of slowing down, in line with normalizing industry margins. Revenue from mortgages was up 47% from a year earlier, Kelman said during the company’s earnings call. In the first quarter, the year-over-year revenue gain for mortgages was almost 200%.

The underwriting of loans that don’t close due to losses in bidding wars has been one of the challenges when it comes to profit margins in the mortgage unit, Kelman said.

Overall, the company is working on generating efficiencies through market share growth and technology to address profitability concerns, he said.

“We are...getting some advantages from scale and we just have to see how much of our efficiency gains are going to be offset by a tough market,” said Kelman.