(Bloomberg) — Redfin Corp. sank to a fresh record low after an Oppenheimer analyst downgraded the stock and said the real estate company’s model was “fundamentally flawed.”
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Shares dropped almost 10% on Monday to $3.63, as Oppenheimer’s Jason Helfstein cut his recommendation to underperform from a hold-equivalent rating. He sees room for further pain and slashed his price target to a Street-low of $1.30.
“We believe that Redfin’s business is fundamentally flawed, as the company continues to use a fixed-cost model for agents,” the analyst writes. “This prevents the company from optimizing margins when the housing markets decline and limits share gains when markets rebound.”
Redfin said that any comments the company can share about its stock price move will be addressed on its earnings conference call on Wednesday after it releases results.
Redfin has plunged about 91% so far this year, as real estate technology firms have been slammed amid the housing market’s slowdown from rising mortgage rates.
Last week, Opendoor Technologies Inc. said it would lay-off about 18% of its headcount. The week before, Zillow Group Inc. cut about 5% of employees. Opendoor slumped 14% on Monday, and Compass Inc. slid 6.3%.
(Updates with closing share-price moves throughout.)
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