Shares of Redfin (RDFN 5.32%) lost 20% of their value on Friday, following the release of the real estate company's fourth-quarter earnings report.
Redfin continues to take share in the $43 trillion U.S. housing market, thanks to its proven ability to help its customers sell their homes faster and for higher prices. The rising popularity of its website and mobile apps -- average monthly users rose 10% to 47 million in 2021 -- resulted in houses on Redfin's platform selling roughly five days faster and for $1,600 more than comparable homes listed by rival brokerages.
Cost savings are another powerful advantage for Redfin. Sellers can pay listing fees as low as 1%, compared with the 2.5% commission other agents often charge. In turn, Redfin estimates that it saved its customers over $77 million in the fourth quarter alone.
These competitive advantages helped Redfin's market share of U.S. existing home sales by value rise by 11 basis points to 1.15%.
However, Redfin's losses are mounting as it expands into new markets. It posted a net loss of $28.4 million, or $0.27 per share, compared with net income of $12.2 million, or $0.11 per share, in the year-ago period.
Redfin expects to post an even larger loss in the first quarter, as it spends heavily to support its growth initiatives. Management forecast a net loss of $115 million to $122 million, which would exceed the $109.6 million Redfin lost in all of 2021.