Robert Reffkin (Compass, Getty)

TheRealDeal writes, "Compass shares climbed to a nearly three-month high Friday after an earnings report revealed mounting losses but gains in market share and progress in its cost-cutting efforts.

The run-up began Thursday, before earnings were released at the market close. The share price gained 32 percent that day, then another 73 percent in the first hour of trading Friday before retreating a bit.

The brokerage’s stock was hovering around $3.50 at midday, up nearly 50 percent since markets opened Friday morning and 90 percent from Wednesday afternoon, when it fell to an all-time low of $1.85.

The iShares U.S. Real Estate ETF, an index that tracks the broader real estate sector, stood at $88.04 per share, up 7.2 percent from Wednesday afternoon.

Compass released its earnings after the market closed Thursday, when shares rose 31 percent in after-hours trading to $2.43. Its stock remains down more than 60 percent since the start of the year.

The company reported a $154 million net loss in the third quarter as rising mortgage rates curtailed demand in the housing market, but its $1.49 billion in revenue beat Wall Street estimates of around $1.45 billion.

Though it has stopped offering equity or cash incentives to attract new agents as it looks to trim $320 million in annual expenses, Compass added to its agent count in the quarter and gained market share from what CEO Robert Reffkin called “weakening competitors” on a conference call with analysts Thursday afternoon.

The brokerage added 355 principal agents in the third quarter for a total of 13,314, and grew its market share to 4.6 percent over the past 12 months, up from 4.3 percent in the prior-year period.

“Every time you read a headline that Compass lost money, what you’re really reading is that Compass decided to invest in agents,” Reffkin told a crowd at The Real Deal’s South Florida Real Estate Showcase + Forum Thursday afternoon, hours before the earnings release.

At the event, Reffkin also shot down rumors that the brokerage was in talks regarding a private-equity takeover and stood by Compass’ decision to spend nearly $1 billion building out its tech platform, which it has said will give it a recruiting and retention edge over its rivals.

“We raised almost $2 billion,” he said. “Nobody gave us money to put it in a bank account.”

The percentage of Compass shares that investors shorted fell 5 percent in the last two weeks of October, the latest period for which short-selling reports are available, after climbing 10 percent in the first half of the month.

Compass stock was buoyed along with broader markets on Thursday on news that inflation in the U.S. economy showed signs of slowing."

Source: TheRealDeal

Written by: Orion Jones

Published: November 11, 2022

Posted by Grossman & Jones Group on


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