Redfin’s tough year grew even tougher on Monday when an analyst downgraded its stock, citing doubts about its business model and sending its share price to a record low.
Days before of the discount brokerage’s third-quarter earnings release, Oppenheimer analyst Jason Helfstein cut his recommendation from a hold-equivalent rating to an underperform, Bloomberg reported. Helfstein also lowered his price target all the way down to $1.30, essentially advising investors to sell before things get worse.
Redfin’s stock hit an all-time low of $3.32 by midday before rebounding slightly to $3.63 when the markets closed. Its shares have lost more than 90 percent of their value since the start of the year. The company is due to report its third-quarter earnings on Wednesday.
In the second quarter, Redfin reported a net loss of $78.1 million, compared to a net loss of $27.9 million in last year’s second quarter.
At the time, chief executive officer Glenn Kelman said the losses wouldn’t be “enough to sink our battleship” and expressed a belief that its properties division would earn a “significant gross profit for the full year.”
As recently as last year, Redfin was soaring. In February 2021, as its share price topped $95, the brokerage was looking to expand its agent count, hiring “faster than ever.”
But this year, as rising mortgage rates wreaked havoc on the housing market, things took a sharp turn. In June, Redfin announced it would be laying off around 470 employees, or approximately 8 percent of its workforce. Kelman referred to the layoffs as a “setback,” but said there would be no changes to how it compensates its agents, who earn salaries and bonuses based on closings, rather than a traditional commission structure.