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Here's Why Realogy Stock Is Plunging Today

By Matthew Frankel, CFP® – Aug 29, 2019 at 12:47PM

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The real estate brokerage company is losing a key lead generation source.

What happened

Realogy (RLGY 1.43%), which owns several major real estate brands including Century 21, Coldwell Banker, ERA, and others, is having a terrible day. As of noon EDT, the company's stock price had fallen by 22%.

The reason? In a regulatory filing, Realogy disclosed that USAA is discontinuing the USAA Real Estate Rewards Network, and that it will have a "material impact on earnings at Cartus [one of Realogy's subsidiaries] and will result in a reduction of in-network homesale transactions for Realogy and its brands."

House with sold sign in yard.

Image source: Getty Images.

So what

Given this news, it's not difficult to see why investors are disappointed. The USAA program generated leads that had been handled by the Cartus Broker Network. And according to the filing, USAA accounted for a "significant portion" of the company's business.

Now what

Realogy also mentioned that its Cartus brand is launching its own military rewards program on Sept. 7, the day after the USAA Real Estate Rewards Network program will accept its last enrollments.

Additionally, Realogy has some other potential positive catalysts, such as its recently announced partnership with Amazon to launch a homebuying program called TurnKey that will match prospective homebuyers with Realogy's real estate agents.

Even so, it's questionable just how much of a profit boost the Amazon program could provide even if it's successful, and it's unlikely that Realogy's military rewards program will be as effective of a lead generator as the USAA program it aims to replace.

Realogy has been beaten down tremendously, losing nearly 70% of its value so far in 2019 alone. This latest development gives stock investors more reason to be cautious, as a slow real estate market and disruption in the industry has hurt the company and added massive uncertainty to its future.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Matthew Frankel, CFP has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends AMZN. The Motley Fool has a disclosure policy.

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