Wrapping up Q2 earnings, we look at the numbers and key takeaways for the real estate services stocks, including Opendoor (NASDAQ:OPEN) and its peers.
Technology has been a double-edged sword in real estate services. On the one hand, internet listings are effective at disseminating information far and wide, casting a wide net for buyers and sellers to increase the chances of transactions. On the other hand, digitization in the real estate market could potentially disintermediate key players like agents who use information asymmetries to their advantage.
The 14 real estate services stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was 13.1% below.
Big picture, the Federal Reserve has a dual mandate of inflation and employment. The former had been running hot throughout 2021 and 2022 but cooled towards the central bank's 2% target as of late. This prompted the Fed to cut its policy rate by 50bps (half a percent) in September 2024. Given recent employment data that suggests the US economy could be wobbling, the markets will be assessing whether this rate and future cuts (the Fed signaled more to come in 2024 and 2025) are the right moves at the right time or whether they're too little, too late for a macro that has already cooled.
Luckily, real estate services stocks have performed well with share prices up 15% on average since the latest earnings results.
Opendoor (NASDAQ:OPEN)
Founded by real estate guru Eric Wu, Opendoor (NASDAQ:OPEN) offers a technology-driven, convenient, and streamlined process to buy and sell homes.Opendoor reported revenues of $1.51 billion, down 23.5% year on year. This print exceeded analysts’ expectations by 2.9%. Despite the top-line beat, it was still a slower quarter for the company with revenue guidance for next quarter missing analysts’ expectations.
“We are proud of our second quarter performance and the progress we’ve made in building a platform where all customers can begin their home selling journey. Revenue, Contribution Margin, and Adjusted EBITDA exceeded the high end of our guidance, and our acquisitions outperformed expectations, growing nearly 80% year-over-year. We continue to make meaningful progress increasing brand awareness, delivering industry-leading seller NPS, expanding our product offerings, and driving structural efficiencies across our platform that we expect will benefit the Company for years to come,” said Carrie Wheeler, CEO of Opendoor.
Opendoor delivered the slowest revenue growth of the whole group. Unsurprisingly, the stock is down 7% since reporting and currently trades at $1.98.
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Best Q2: The Real Brokerage (NASDAQ:REAX)
Founded in Toronto, Canada in 2014, The Real Brokerage (NASDAQ:REAX) is a technology-driven real estate brokerage firm combining a tech-centric model with an agent-centric philosophy.The Real Brokerage reported revenues of $340.8 million, up 83.9% year on year, outperforming analysts’ expectations by 28.9%. The business had an incredible quarter with an impressive beat of analysts’ earnings estimates.
The Real Brokerage delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 5.5% since reporting. It currently trades at $5.75.
Weakest Q2: Offerpad (NYSE:OPAD)
Known for giving homeowners cash offers within 24 hours, Offerpad (NYSE:OPAD) operates a tech-enabled platform specializing in direct home buying and selling solutions.Offerpad reported revenues of $251.1 million, up 9.1% year on year, falling short of analysts’ expectations by 11.4%. It was a disappointing quarter as it posted revenue guidance for next quarter missing analysts’ expectations.
Offerpad delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 14.1% since the results and currently trades at $3.35.
Redfin (NASDAQ:RDFN)
Founded by a former medical school student, electrical engineer, and Amazon (NASDAQ:AMZN) data engineer, Redfin (NASDAQ:RDFN) is a real estate company offering brokerage services through an online platform.Redfin reported revenues of $295.2 million, up 7.1% year on year. This print surpassed analysts’ expectations by 1.2%. Overall, it was a strong quarter as it also recorded an impressive beat of analysts’ earnings estimates.
The stock is up 57.6% since reporting and currently trades at $11.10.
Cushman & Wakefield (NYSE:CWK)
With expertise in the commercial real estate sector, Cushman & Wakefield (NYSE:CWK) is a global Chicago-based real estate firm offering a comprehensive range of services to clients.Cushman & Wakefield reported revenues of $2.29 billion, down 4.9% year on year. This number missed analysts’ expectations by 2.9%. Overall, it was a softer quarter as it also recorded a miss of analysts’ operating margin estimates.
The stock is down 5.2% since reporting and currently trades at $12.62.
This content was originally published on Stock Story
