Please ensure Javascript is enabled for purposes of website accessibility

Why Redfin Shares Jumped Today

By Lou Whiteman - Mar 11, 2021 at 4:10PM

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

Growth names are suddenly back in fashion again.

What happened

Shares of Redfin (RDFN 7.83%) climbed more than 10% on Thursday despite little company-specific news. The company has been caught up in a lot of the growth-stock volatility in recent weeks and is recovering along with the market on Thursday.

So what

Redfin shares have covered a lot of ground in a short amount of time so far in 2021. The stock was up 40% for the year as recent as mid-February. But it gave all that up and more in the second half of the month and into March as part of a broader rotation away from high-valued growth stocks and toward value.

RDFN Chart

RDFN data by YCharts.

In recent days, those pressures on growth have been easing, and shares of Redfin have moved higher as a result.

Redfin did put out a news release on Thursday that highlighted how small its "iBuyer" service is, saying that top real estate companies that offer to buy houses directly, including Redfin, Zillow, Opendoor Technologies, and Offerpad, accounted for just 0.3% of homes sold in the fourth quarter.

Myron Curry, a Redfin senior investment specialist for RedfinNow in Los Angeles, said in the statement that the primary reason the total is so small is "the lack of homes for sale, but the inventory situation is improving each quarter as we get further away from the worst of the pandemic."

A for sale sign in front of a house.

Image source: Getty Images.

Now what

Those stats can be read either way. The small market share shows both the potential for future growth and the difficulty these services have had gaining traction.

It seems unlikely that the news release would move the stock dramatically in either direction. Rather, Redfin these days trades on the long-term potential of the business.

For most of the last few years, investors have given companies like Redfin the benefit of the doubt that over time they would generate substantial growth, but in late February doubt crept into the equation and sent some heading for the exits. As sentiment improves again, the stock is recovering some of what it lost in the past few weeks as evidenced by a sharp move higher on Thursday.

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
RDFN
$11.16 (7.83%) $0.81

*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 service.

Stock Advisor Returns
338%
 
S&P 500 Returns
119%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/18/2022.

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.