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Why Redfin Stock Jumped Thursday

By Daniel Sparks – Updated Feb 13, 2020 at 5:52PM

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There's a lot to like in the tech company's fourth-quarter update, including accelerated revenue growth and expanding margins.

What happened

Shares of online real-estate brokerage Redfin (RDFN -5.64%) jumped on Thursday. As of 11:20 a.m. EST, the stock was up about 14%.

The stock's gain comes as the company's top and bottom lines both beat analyst expectations. In addition, management's outlook for first-quarter revenue topped estimates.

A chart showing a stock price moving higher

Image source: Getty Images.

So what

Redfin reported fourth-quarter revenue of $233 million, up 88% year over year. This was an acceleration from 70% revenue growth in Q3. Analysts, on average, were expecting revenue of $217 million. The company's loss per share during the period was $0.08, narrower than a loss of $0.14 in the year-ago period and beating analysts' average forecast for a loss per share of $0.12. 

Capturing the company's momentum, this was the fourth quarter in a row that Redfin's core real estate services segment saw an accelerated revenue growth rate. More importantly, Redfin once again saw a year-over-year improvement in the gross profit margin of every one of its business segments.

Now what

For the first quarter of 2020, management expects revenue to increase 63% to 71% year over year to between $179 million and $188 million. Analysts, on average, were expecting first-quarter revenue of about $178 million.

Editor's note: This article has been corrected. This was the fourth quarter in a row that Redfin's core real estate services segment saw an accelerated revenue growth rate.

Daniel Sparks has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Redfin. The Motley Fool has a disclosure policy.

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