What happened
Shares of Redfin (RDFN 0.19%) were moving lower as the online real estate brokerage fell in line with a broad market sell-off. While there was no major company-specific news out on Redfin, a few news items may have pushed the stock lower.
As of 2:11 p.m. ET, shares were down 11.4%, while the Nasdaq had fallen 1.7% and the small-cap Russell 2000 index was off 2.1%.
Image source: Redfin.
So what
There wasn't a clear reason for the market sell-off today, as investors reacted to a mix of earnings and economic reports this morning as they await the Federal Reserve's rate hike decision next week. Overall, earnings reports from the likes of McDonald's and Pepsi show the U.S. consumer continues to be strong, though industrial companies like 3M and UPS are feeling more headwinds.
Redfin stock has been highly volatile over the last year after crashing in 2022, and as a real estate brokerage, the company is sensitive to the macro-level economy.
There was some good news on the housing front, as the Case-Shiller Index reported that home prices rose on a monthly basis for the first time in eight months, showing the national housing market may be stabilizing after a decline over several months.
That should be a tailwind for Redfin, assuming home sales volumes also come back, but it could also persuade the Federal Reserve to continue raising rates.
Additionally, Redfin CEO Glenn Kelman is calling employees back to the office in a hybrid capacity after earlier approving remote work, according to a blog post yesterday. The decision comes after three rounds of layoffs and could reflect ongoing challenges with the company.
Now what
Redfin had just announced another round of layoffs earlier this month, showing the company continuing to cut costs to cope with a sluggish housing market.
While the stock has the potential to rebound, it will need a pickup in the housing market to do so. The latest data from the Case-Shiller Index may be a positive sign, but home prices are still down on a year-over-year basis, and other data points show continuing drops, especially after last month's banking crisis.
We'll learn more when Redfin reports earnings on May 4. Analysts are expecting a 47.4% decline in revenue to $314.5 million, reflecting the closure of its Redfin Now home-flipping business, and on the bottom line sees a loss of $1 per share, down from a loss of $0.86 in the quarter a year ago.
Those estimates show the company still faces a number of challenges as it attempts to turn around the business.
