Please ensure Javascript is enabled for purposes of website accessibility

Redfin Shares Slump as It Sells $110 Million in Stock

By Eric Volkman - Mar 30, 2020 at 6:06PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

An investment firm run by a longtime Redfin investor is buying a mix of the company's common and preferred shares.

Redfin (RDFN 6.69%) will collect $110 million from the sale of its stock, but investors aren't exactly welcoming the cash infusion. 

The online real estate brokerage announced Monday that it has agreed to sell the stock to Durable Capital Partners, a privately held investment firm. For its money, Durable will receive $70 million worth of Redfin common stock at $15.61 per share, and $40 million in convertible preferred stock

The latter security is convertible into Redfin common stock; the conversion price is $19.51 per share if the buyer exercises its option. But it will convert automatically after three years if and when Redfin's common shares close above $27.32 per share for 30 consecutive trading days. If neither of these events occur, the preferred stock is to redeem on Nov. 30, 2024, either in common stock or cash as per the buyer's choice.

House with a

Image source: Getty Images

Durable is led by investor Henry Ellenbogen, who has invested in Redfin at various times and through various means since 2013.

In its press release announcing the Durable deal, Redfin said of Ellenbogen that "[i]n chaotic times, he understands our long-term commitments to our culture and our technology, and why those commitments position us to take share in a housing market that is being transformed by this pandemic to be more virtual, convenient and efficient." 

Although Redfin's Q4 results smashed analyst estimates, the company is wading into an uncertain future given the impact of the coronavirus pandemic on the real estate business.

Investors didn't cheer Redfin's latest news, likely because that $15.61 common-stock price was under the company's Friday market close of $16.09. On Monday, in contrast to the broader market and the performance of certain top stocks, Redfin's shares declined, albeit marginally.


Eric Volkman 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.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Redfin Corporation Stock Quote
Redfin Corporation
$12.76 (6.69%) $0.80

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/13/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.