Redfin Corporation (RDFN): Is This Insider Trading a Scary Sign?

After opening Wednesday at around $15.5, Redfin Corporation (NASDAQ:RDFN) stock surged to as high as $15.9. It then made a downturn, dipping as low as $14.86. Although the stock bounced a bit into the close, it finished the day at $15.43, down -1.04 points or -6.31 percent on the day. The final volume for the day was 2.745 million, which was more than its average volume. The firm is left with a market cap of $1.39 billion and now has 89.87 million shares outstanding. Redfin Corporation (RDFN) stock has lost -4.81 percent of market value in 21 trading days.

RDFN stock has a trailing 3-year beta of 0, offering the possibility of a lower rate of return, but also posing less risk. The portion of a company’s profit allocated to each outstanding share of common stock was -$1.09 a share in the trailing twelve months. The stock’s value has fallen -50.73 percent year to date (YTD) against a decline of -32.77 percent in 12 month’s time. The company’s shares still trade -51.02 percent away from its 1-year high of $31.50 and 6.71 percent up from 52-week low of $14.46. The average consensus rating on the company is 2.5, on a scale where 5 equates to a unanimous sell rating. In short, the mean analyst recommendations are calling this stock a sell.

Redfin Corporation (RDFN) will probably climb 33.77 percent over the next 12 months, according to price target estimates compiled by finviz. Meanwhile, they have set a $27-month high price target. This represents a whopping 74.98 percent increase from where shares are trading today. The 12-month median price target assigned by the analysts stands at $20, which represents a return potential of 29.62 percent when compared to the closing price of the stock of $15.43 on Wednesday, November 07. The lowest price target for the stock is $17 — slightly more than 10.17 percent from RDFN’s current share price.

History has shown that shares in Redfin Corporation have gone down on 5 different earnings reaction days and are predicted to add 0.08 percent when the company reports upcoming earnings. Investors will get their next glimpse of RDFN’s Q3 earnings on November 08. Analysts are forecasting revenue to climb 27.2 percent to $139M in the fiscal third quarter, while earnings are seen soaring by nearly -83.33 percent to $0.02 per share. It earned $0.04 per share, better than the $0.02, adjusted, expected by Thomson Reuters consensus estimate. Revenue was $143M, better than the $139M analysts expected. Earnings are estimated to increase by -385.7 percent this year, 18.2 percent next year and continue to increase by 5 percent annually for the next 5 years.

Let’s take a look at some insider activity at Redfin Corporation (NASDAQ:RDFN) and see the pattern. The earliest insider trade took place on 10/26/2018. Nagel Scott parted with a total of 6.25 thousand shares of company at average share price of $16.44. The total for the sales was set at $102.75 thousand. After this transaction, the President of Real Estate Ops account balance stood at 8.33 thousand shares. The stock lost -6.14 percent since that insider sale. On 10/15/2018, Wiener Adam, Chief Growth Officer, sold 10 thousand shares at a price per share of $16.05. This removed 160.5 thousand shares from the insider’s fortune and the stock saw a -3.86 percent retreat in value since the news became public. This transaction left 209.43 thousand shares in the Chief Growth Officer account.

On 10/01/2018, Chief Technology Officer Frey Bridget performed a sale transaction worth $95 thousand. This sale at $19 each has eliminated 5 thousand shares from the insider’s portfolio position. Meanwhile, shares have recorded -18.79 percent decrease since the transaction was reported. The insider now is left with 37.76 thousand shares remaining in the account. Tobaccowala Selina, who performs the Director job, sold 0.57 thousand shares for $10.53 thousand. The disposal occurred on 09/26/2018 was priced at $18.48 per share. The share price plunged -16.5 percent since the reporting date. Tobaccowala Selina now left with a stake of 19.01 thousand RDFN stock worth $293.36 thousand after the insider selling.

The stock is currently hovering around the first support level of $14.89. Below this, the next support is placed in the zone of $14.36. Till the time, the RDFN stock trades above this level, bulls have nothing to fear. On momentum oscillators front, ‘RSI’ has touched 41.74 on daily chart, which may remain a cause for concern. If the price breaks below $14.36 level on closing basis, then we may see more profit booking and the stock may show further weakness. On the flipside, hitting the $15.93 mark may result into a pull-back move towards $16.44 level.

Further, it is sporting a 3.24 on the Price-to-Sales ratio. Compare this with the industry average P/S of 2.56. 27.9 percent is the gross profit margin for Redfin Corporation and operating margin sits at -6.3 percent. Along with this, the net profit margin is -15.1 percent.