Should I Buy Redfin (RDFN)? Finance YouTuber Analysis

The analyst suggests avoiding Redfin, despite its acquisition premium, due to its historical unprofitability and the strategic misstep of the Rocket acquisition. He questions how a company in the agent business consistently loses money and believes the vertical integration with Rocket will put both companies in a worse strategic position compared to Zillow.

“I frankly don't understand how a company in the agent business who's actually taking a piece of each financial transaction in the housing market loses money.”

The analyst believes Redfin is a buy despite the current housing downturn and the closure of its iBuying business. He argues that the company's core real estate services revenue is ahead of guidance, market share is growing, and operating expenses are coming down. He also highlights the company's strong working capital position and the potential for its rentals business to grow during a weak economic period. The analyst has high conviction in CEO Glenn Kelman's leadership and believes the stock, though beaten down, has significant long-term upside.

“I bought some Redfin last week because I believe the company's going to get through this downturn and it's going to be fine and there's a tremendous upside.”

The YouTuber recommends Redfin as a buy, citing its much cheaper valuation at 0.8 times price to sales compared to Zillow. He expects double-digit revenue growth next year and improved earnings, with its title, settlement, and mortgage businesses benefiting from an increase in sales transactions in a flipping housing market.

“Redfin also provides title and settlement services along with its Mortgage business which should all benefit from this increase in sales transactions.”