Shares of Redfin (RDFN 4.08%) have been caught in the downdraft afflicting markets in recent weeks, down 40% in the last few weeks. But on Tuesday the stock, along with the broader market, reversed course, with Redfin shares up more than 10% in late morning trading.
It's been a rough few weeks to be invested in growth companies, and Redfin has been no exception. The company's stock sell-off was triggered by the guidance attached to its late February earnings report. Redfin's core real estate market is booming, but the company said it has been held back by a shortage of homes for sale and not enough agents to meet demand.
In an environment where investors are beginning to fret about growth prospects for highly valued companies, Redfin's guidance provided ample fodder to fuel a sell-off.
But as problems go, a red-hot market and not enough capacity to fully capture it is a relatively good one to have. As sell-offs fueled more on market sentiment than company fundamentals tend to do, things turned on a dime on Tuesday, with the Nasdaq Composite Index reversing recent selling with a 3%-plus jump. Redfin shares are going along for the ride.
Redfin is still down slightly year to date, but up 45% in the last six months. This has been a volatile stock, and I see no reason to believe that will not continue into the future.
For long-term-focused investors, there is still a lot to like about Redfin. The company has just 1% of its core market right now, and continues to add new products like mortgages and services that give it other opportunities to grow. I don't know what to expect from the stock over the next six months or year, but the company looks like a long-term winner.