Why Redfin Stock Rocketed 30% Higher This Week
Shares of Redfin (NASDAQ: RDFN) popped by as much as 29.5% this week, according to data from S&P Global Market Intelligence. The online real estate brokerage and mortgage originator surged in reaction to news that inflation was continuing to ease as well as recent data suggesting that activity in the housing market is rising. Interest rates on mortgages have also fallen from their recent highs.
As of the close on Friday, shares of Redfin were up 27% for the week, but were still down 93% from their all-time high.
Redfin earns revenue when people transact on homes and originate mortgages through its online platform. Over the last couple of years, it has faced major headwinds as the Federal Reserve rapidly raised benchmark interest rates to fight inflation. Homebuying activity across the country slowed as mortgage rates climbed from around 3% to over 7%. Affordability has been at its lowest levels for homebuyers in recent history, and perhaps ever, as interest payments on mortgages went up by more than 50%. That stalled Redfin's revenue growth and led to deteriorating profits -- the company booked an operating loss of around $300 million over the last 12 months.
Source Fool.com
