Rithm Capital (RITM) Plunges 2.74% in Two Days as Macroeconomic Risks Weigh on REIT Sector

Rithm Capital (RITM) fell 1.21% on Friday, marking its second consecutive day of declines and a total drop of 2.74% over the past two trading sessions. The stock reached an intraday low not seen since April 2025, with a 1.39% pullback during the session. This selloff reflects ongoing pressure on the real estate investment trust as investors weigh macroeconomic uncertainties and sector-specific risks.

Analysts highlight a valuation gap as a key factor, with RITM currently undervalued by 24% relative to its $10.95 closing price. Projections of a fair value target at $14.40 imply a potential 31% upside, supported by forecasts of refined profit margins and earnings growth. However, risks such as industry competition and interest rate volatility could hinder progress. The company’s high debt-to-equity ratio of 3.95 and sensitivity to borrowing costs further complicate its expansion trajectory.

Institutional confidence remains a counterbalance to the recent weakness. Foundry Partners LLC and Stevens Capital Management LP have increased stakes in RITM, signaling support for its long-term strategy. A recent partnership to acquire a $120 million Virginia property underscores the firm’s focus on mortgage-backed securities and residential lending opportunities. Meanwhile, a third-quarter dividend declaration has reinforced its appeal to income-focused investors, despite a “Poor” financial strength rating due to leverage concerns.

Technical indicators suggest the stock is oversold, with an RSI of 21.59. While this historically signals potential for a rebound, the path forward depends on RITM’s ability to navigate rising interest rates and manage its debt burden. Analysts remain cautiously optimistic, with 10 out of 10 surveyed maintaining “Buy” or higher ratings. However, the stock’s beta of 1.08 highlights its elevated volatility compared to the broader market, requiring investors to balance growth potential against near-term risks.