Shares of Redfin (RDFN -1.68%) surged last month as the online real estate brokerage posted a better-than-expected results in its first-quarter earnings report and said that housing demand had bounced back strongly from the lockdowns.
As a result, the stock finished May up 42%, according to data from S&P Global Market Intelligence. The stock gained throughout the month:
Shares of Redfin started rallying on May 8, gaining 8% after its first-quarter earnings report came out. The company posted 73% revenue growth to $191 million, while gross profit jumped 368% to $13 million, showing that the business is gaining scale and leverage. On the bottom line, its loss per share narrowed from $0.74 a year ago to $0.64, which beat estimates at a loss of $0.75.
Touting the transition toward real estate technology , CEO Glenn Kelman said, "Real estate commerce has probably virtualized itself more in the past two months than it had in the prior 20 years. This makes Redfin's technology advantage over other brokers more important than ever."
Later in the month, the stock climbed as the company offered more evidence that the housing market was bouncing back quickly as management said that housing demand was back above pre-pandemic levels and that it had brought back 350 employees of the 1,000 that it had furloughed. Redfin said that for the week ended May 17, housing demand was 17.5% higher than before the pandemic, helped by record-low mortgage rates. The stock rose 7% on the news.
Redfin's guidance for the second quarter actually called for a decline in revenue of 4%-9% and a wider net loss from a year ago, but with the strong recovery in housing demand, the company may be able to top that guidance. Online real estate stocks like Redfin had sold off sharply during the start of the pandemic, but the stock has recovered nearly all of its losses as it was down more than 60% at one point. The stock is now approaching an all-time high, but will likely need more help from the real estate market to keep up this momentum.