The US real estate market recorded an exceptional performance in 2021, with home sales on track to reach their highest level in 15 years. According to the Federal Housing Finance Agency, the average house prices have climbed by almost 20% in the third quarter in 2021, compared to their figures a year ago.
Technology has steadily tapped into the real estate market. Since real estate or prop-tech technology became mainstream in 2021, investors have rushed to invest unprecedented amounts of money in the industry. According to a report by the Center for Real Estate Technology & Innovation, venture capital investments in real estate technology companies reached $ 32 billion in the year, breaking the previous annual record.
the IT market in real estate is expected to reach $ 13.46 billion by 2026, with a CAGR of 12.2%. Against this backdrop, Wall Street analysts expect real estate technology stocks of Openoor Technologies Inc. (OPEN) and Redfin Corporation (RDFN) to recover by more than 70% of the price in the short term.
Open Doors Technologies Inc. (OPEN)
OPEN in Tempe, Arizona, operates as a digital platform for residential real estate services in the United States. The company’s platform allows customers to buy and sell homes online.
On September 23, Access Technology Ventures, a subsidiary of the Access Industries industry group, announced an additional $ 300 million purchase of OPEN shares. Access has supported OPEN since 2015.
For its fiscal third quarter, ended September 30, OPEN’s revenue increased 569.3% year-over-year to $ 2.27 billion. Its adjusted gross profit increased 606.9% from the previous year quarter to $ 233.78 million. And his Adjusted EBITDA was $ 34.51 million, up significantly from its negative value a year ago.
The consensus estimate of EPS for the fourth fiscal quarter of 2021 shows an increase of 59.2% year-on-year. And the consensus estimate of revenue of $ 3.14 billion for the same quarter reflects an improvement of 1,162.2 percent from the previous year’s quarter.
Of the five Wall Street analysts rating OPEN, three rated it Buy, while two rated it Hold. The 12-month median price target of $ 29.75 indicates a Potential for an increase of 152.1%. Price targets range from a low of $ 21.00 to a high of $ 42.00.
Redfin Company (RDFN)
RDFN in Seattle, Washington, is a real estate brokerage firm operating in the United States and Canada. The company’s offerings include an online real estate marketplace that provides real estate services. It also provides title and settlement services.
On November 15, RDFN announced its launch in Big Bear, Calif., And Ocean City, Md., As well as the expansion of its brokerage services in Hudson Valley, New York, to include parts of County of Ulster. Earlier in November, RDFN announced its launch in the Minneapolis-Saint Paul metro area. This should expand the company’s presence across the country.
RDFN’s total revenue increased 128% year-on-year to $ 540.07 million in its fiscal third quarter, ended September 30. This can be attributed to a 38.8% increase in service revenue from the previous year quarter to $ 301.66 million. Its gross profit improved 36.8% from the same period last year to $ 127.30 million.
Analysts expect RDFN’s revenue to grow 144.5% year-on-year to $ 597.91 million in the last quarter of 2021.
Three of the nine Wall Street analysts rating RDFN rated it Buy. The 12-month median price target of $ 59.29 indicates a 71.7% upside potential. Price targets range from a low of $ 27.00 to a high of $ 88.00.
OPEN shares were trading at $ 11.16 a share on Friday afternoon, down $ 0.64 (-5.42%). Year-to-date, OPEN is down -23.61%, compared to a -1.69% increase in the benchmark S&P 500 over the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. Following…