What to Make of Redfin Stock as Housing Market Cools Off

Year-to-date, Redfin stock has shed 73.5%

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Redfin Corp (NASDAQ:RDFN) is down 6.1% at $10.07 at last check, after the real estate name made headlines earlier this week when CEO Glenn Kelman sold 15,000 shares on Wednesday. The security has been struggling with resistance at the 20-day moving average since March, a trendline that eventually guided shares to their May 11, record low of $8.64. Year-to-date, Redfin stock has shed 73.5%.

RDFN 20 Day

The brokerage bunch is pessimistic towards RDFN, with 12 of the 14 firms in coverage calling it a "hold" or worse. Short sellers are piling on, too, with short interest up 12.8% in the last two reporting periods. The 14.82 million shares sold short account for 14.3% of the stock's available float, or more than one week's worth of pent-up buying power.

There has been a strong appetite for bearish bets in the options pits. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), RDFN's 10-day put/call volume ratio of 1.71 ranks higher than 87% of readings from the last year. In other words, puts are getting picked up at a much quicker-than-usual pace.

The real estate concern is far from profitability, with expectations indicating RDFN will see a $0.90 decrease in EPS (earnings per share) for 2022, at an EPS of -$2.02. Still, Redfin is expected to generate a $0.64 increase in earnings for 2023, with estimates at -$1.38.

Redfin stock provides a low valuation at a price-sales ratio of 0.48, after its bearish run over the past 12 months. RDFN also offers a high sales growth rate, having increased annual revenues by 362.5% since 2018. Plus, the company is anticipated to increase revenues by 32.5% for 2022 and by 15.3% for 2023, making RDFN a low value stock with incredibly high growth potential.

 

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