Hello Autists,

Today I am presenting Redfin (RDFN) and why it can and will be a 200% play over the next two years. Yes, I did say 200%. Just on stock, not even counting options. Let’s jump in.

**Investment Thesis:** Redfin a super cyclical stock will be rebounding with great strength due to Online Real Estate Market Growth, AI investments, diverse Revenue Streams, and most importantly shrinking interest rate environment to kick it all off. They also got rid of their Buying program and implemented for the first time now the Redfin Premier Nationwide service to homebuyers.

***What is Redfin?***

Redfin is a residential online real estate brokerage. The company uses technologies such as map search and virtual house showings to increase exposure, improve the quality of the customer experience, all while delivering efficiencies and saving the consumer costs. Redfin also provides the ability to do digital and online document management making it a one stop shop for one’s real estate needs.

They also use the same combination of technology and local service to originate mortgage loans and offer title and settlement services. They also offer digital platforms to connect consumers with available apartments and houses for rent.

**Their mission is to redefine real estate in favor of the consumer. To change an industry that has had little disruption. Redfin’s business model to undercut competition is based on sellers paying Redfin a discounted fee, either 1 or 1.5% to list the seller’s home.**

Real Estate agents have to be the biggest thieves taking 6% commission being a realtor. Every $1,000,000 home sold equals $60,000 in fees for a license that can be earned in 75 classroom hours. And requires no technical skills or degree. Nothing against real estate agents, but after watching Selling Sunset on Netflix and working in real estate investments myself, I am ready to see the real estate market adapt, and move past agents who don’t provide more than $20 of value and headaches saying “Location, location, location” so I can buy more FD and OTD’s in my brokerage**.**

**Investment Thesis Catalysts:**

**Online Real Estate Market Growth and Market Share:** There is ongoing shift towards online platforms in the real estate industry that present an opportunity for Redfin to capture a larger share of the market. As more homebuyers and sellers embrace digital solutions, Redfin’s technology-driven approach and user-friendly platform could lead to increased adoption and market penetration.

If any of you autists have ever used RDFN then you know first hand that there is a smooth process with limited conflict of interest since their agents are not commission based. People are becoming tired of the fees posed by traditional agents. Even though there has been a slow down in revenues across the real estate brokerage industry, going forward in a digital world I expect this to continue to grow.

Redfin currently only has .78% of the entire market share in the US….there is room for growth for this billion dollar market cap company where they are actually not being thieves for 6%.

The company’s growth initiatives, such as geographic expansion and strategic partnerships, will contribute to its market dominance and attract more customers. **They just initiated Redfin Premier Nationwide.**

Redfin Premier is a specialized service that caters to high-end and luxury properties. It is designed to provide enhanced marketing and representation for luxury homes in select markets.Redfin Premier offers a range of features and services to sellers and buyers of luxury properties. These may include professional photography and video tours, custom marketing materials, targeted online advertising, and exposure on high-traffic websites and publications. And you know what they say…luxury products bring luxury margins.

**Redfin also launched in 2022 their acquisition from 2021 RentPath**, because lets be honest owning a home for many people right now is a pipedream and now has a rental search. This creates a new pipeline of consumers in different phases of life and I don’t know how many of y’all have been apartment shopping recently but damn these rents just keep going up. While Redfin is known for home buying and selling services… apartment rentals is a new slice of the pie to grow into. And most of the time M&A is a waste of time but this I think added value to Redfin.

**AI Investments:** I knew by putting AI in this, some of yall would make your keyboard sticky. They are making continued investments in artificial intelligence, machine learning, and data analysis to make sure they provide personalized recommendations, improve user experience, and streamline the home buying and selling process to take consumer money and make us tendies.

**Industry Trends:**

Real Estate transactions have gotten wrecked. Interest rates affect this industry a fuck ton. Redfin’s share price has plummeted since 2022. Interest rates and recessionary environments have made homebuyers less of a rush to close deals.

Many experts in the mortgage industry see rates going down especially with the government preventing a US debt default. As the banking sector calms down. Economic data points towards a strong economy, and inflation eases, rates hopefully will go downward through the end of 2023. Fed tightening may put some upward pressure on mortgage rates in the near term, but ultimately more certainty about the Fed’s actions will help to smooth out some of the volatility we have seen with mortgage rates. It is likely that the Federal Reserve will hike interest rates for the tenth consecutive time in May, which may represent the peak for the current round of policy tightening. Also if inflation surprises to the downside or recession fears intensify, mortgage rates could fall.

**Risks/The Dirty: Why this Stock has fallen 90% from its peak.**

Real Estate market got fucked worse than an episode of Brazzers. Interest rates got hiked worse than Johnny Sins morning wood and a recession made people less likely to move. This combination wrecked REITs, brokerages, growth stocks, every autists portfolios, even those losers in r/dividends with their measly .69 cents quarterly payments.

Risks include

* Interest Rates
* Financial Health (They need to crank out some earnings, they are using preferred stock, stock based comp, and senior notes to get through rough times)
* Housing Market (Back to interest rates, houses need to be being bought.)

The good news is, I see that the stock has been wrecked by the risks above. And as the light at the end of tunnel gets closer the stock should derisk itself assuming real estate armageddon does not hit and the stock price should go up. I do not think it will get anywhere near the former all time high stock price in the next couple years, but think it will bring great gains that outpace the general market.

**Future Outlook from Q1 2023 Earnings:**

* Reduced staff and made organizational changes, making support staff ratios to agents better
* Focused on mortgage cross selling business, concierge services, expanding Redfin Preimer Nationwide
* Exited the home buying business that again, fucked earnings like a scene out of brazzers.
* Aim to return to the traditional broker model, increasing monetization.
* Projected real Estate Service back to growth in Q2 2023 and strong double digit growth in rental and mortgage businesses.
* They expected adjusted EBITDA to be breakeven or better for 2023, $190 million better than 2022.

**Valuation Notes:**

The stock has been hammered…look at the stock chart. A lot of worst case nightmare scenarios came true for RDFN. Now RDFN is not a real estate company or REIT, it is a brokerage but also a tech stock. One of the biggest surprises when analyzing RDFN is their price to sales ratio.

RDFN has a P/S ratio of .51 which is incredibly low and before covid traded anywhere from 1.25 to 1.8 regularly. Because the company is not currently profitable it is a great ratio to do a quick comp. Meanwhile stocks like PLTR have a 14.6x P/S ratio. I know they aren’t the same company or growth or macro factors. But as this stock continues to have a great 2023 and market cap grows, more and more institutional investors will enter this heavily cyclical stock that has the most to gain in a great economic cycle.

As revenues rebound and grow, hopefully becoming profitable, see no reason this stock cannot hit over $30 in 30 months.

**Conclusion:**

Good stock. Fucked from tough times past 2 years. Innovative product that actually provides value at much more of a discount then some 6% sucking vampire real estate agent. Buy for tendies. I like it as interest rates go down, house buying environment picks back up, continued expansion, and better margins. Hopefully the worst is behind us and as earnings grow and the stock derisks, stock price will spike.

**Positions:**

1600 Shares at $10.16, looking to add more. And looking to add leaps for 2024/2025.

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