Normally, quarterly investor calls are scripted and boring. CEOs and CFOs read the report. Then, the Q&A session is mostly a process where they don’t answer the question but reinforce talking points. I normally skip them and just rely on what is in the report.
This earnings session started with Realogy. They blew away the analyst forecast; returning the best first quarter earnings in the company’s recent history. The stock bounced up 15% that day before slowly returning back to where it started before the announcement.
In a typical market cycle, a great earnings report for one company in real estate signals the likelihood of excellent earnings reports across the board. That is exactly what happened. Redfin, Compass, and RE/MAX all produced record earnings in Q1. Unfortunately for investors, none of those companies saw a bounce in their stock price. Rather than following Realogy with a bounce in stock price, every one of them saw about a 20% stock price dip.
The market is irrational. The great quarter was not already priced into the stock.
On Tuesday of next week, eXp will be releasing their earnings. By all accounts they are expected to join their peer group and beat analyst estimates. If you look at the trends, you would say that eXp is likely to stay flat when they issue their quarterly results. Apparently, the larger looming financial influence of COVID on the market is dampening the market performance of companies who have clearly benefited from COVID. Real Estate is at an all-time record high.
I have always believed that the performance of a stock includes a component of investor relations. The degree to which analysts “like” a company’s leadership, understand their business, and believe in the strategy of a company all plays a role. Realogy’s Richard Smith was great at working the street and nailing the company’s forecast. Kalman does this well at Redfin today. Everyone else is pretty new at this. I expected Compass to have an edge given the founder’s history at Goldman. Goldman has a target for Compass of $32 over 12 months. The stock is sitting at just over 14.
In summary – expect earnings at eXp to beat the street estimates. I have no clue how the market will react, but the event they are hosting is different. Below you will find some more information, if you wish to check it out.
The eXp 3 Day Event
The event will be conducted in EXPI Campus – the 3D virtual campus of eXp using their Virbela technology. There are 90 sessions planned, highlighted by speaker and entertainers that include 10x founder Grant Cardone, CNN’s Brooke Baldwin, NBA veteran John Salley, and also record producer DJ Jazzy Jeff. It is going to be a party!
You can also use the livestream link if you just want to listen and not enter the EXPI Campus as an avatar.
Location: EXPI Campus. Click To Join!
Tips for downloading the EXPI Campus, powered by Virbela: Video