Will RDFN's Q1 2025 earnings beat forecasts like in 2024?

Redfin's Q1 2025 earnings are unlikely to beat forecasts, and here's why:

1. Consistent Performance Issues: Redfin has been struggling with declining brokerage transactions, which are crucial for revenue growth. In the latest quarter, transactions were at 11,441, marking a 12.2% year-on-year decline over the past two years. This trend suggests a weakening demand and potential pricing pressures, which could impact profitability.
2. Earnings Trends: The company's earnings per share (EPS) have been trending downwards, with a 5.5% annual drop over the last five years. This decline, coupled with the ongoing transaction decline, indicates a challenging financial outlook.
3. Market Conditions: The real estate market is characterized by rising home prices and mortgage rates, which have increased the income required to afford a home significantly. This has led to a widening income gap between renting and buying, potentially affecting Redfin's brokerage revenues as the cost of homeownership becomes less accessible to many.
4. Regional Variations: While there are regional variations in home sales prices, with some areas seeing increases and others decreases, the overall market conditions are likely to weigh on Redfin's performance. The rise in homes selling below list price in Southern California and the potential buyer's market could dampen transaction volumes.
5. Affordability Crisis: The stagnation in homeownership rates among young Americans, driven by rising home prices and high mortgage rates, could further strain Redfin's growth potential in this demographic. This trend is part of a broader affordability crisis, where the income required to purchase a home is significantly higher than before, affecting the broader market and Redfin's business.
6. Strategic Acquisitions: The recent acquisition of Redfin by Rocket Companies is expected to bolster Rocket’s market share in the home purchase segment. While this could potentially lead to synergies and growth opportunities for Redfin, the integration and impact on Redfin's earnings in the short term are uncertain.

In conclusion, given the ongoing challenges in transaction volumes, declining EPS, and adverse market conditions, it is more likely that Redfin's Q1 2025 earnings will not beat forecasts. The company's ability to adapt to these conditions and leverage its technology to maintain a competitive edge will be crucial for future performance.