Online real estate marketplace Redfin surges on news of acquisition by Rocket

Shares of Redfin Corporation, which owns an online real estate marketplace with over a million listings for sale and rent, have soared 66% this week following news of its acquisition by fintech platform Rocket Companies. The combined company is expected to achieve more than $200 million in run-rate synergies by 2027 thanks to cross-selling and eliminating duplicative operations, according to the acquisition announcement.

Redfin surged nearly 70% on Monday to $9.77 per share. Yesterday, it closed about flat at $9.76 per share.

Investors rushed to buy Redfin shares after the announcement that the company would be acquired by Rocket, whose flagship business is mortgage lending. The deal is valued at $1.75 billion, with shareholders receiving $12.50 per Redfin share. Rocket’s offer represents a nearly 115% premium to Redfin’s closing price on Friday, March 7.

Founded in 2004 and headquartered in Seattle, Redfin operates an online real estate platform with over 50 million monthly visitors and a million active listings for sale and rent. The company also runs a brokerage business with more than 2,200 real estate agents across 42 U.S. states. Since its inception, Redfin claims to have saved customers over $1.8 billion in commissions.

Following the announcement, Gordon Haskett analyst Robert Mollins upgraded Redfin from “underperform” to “hold,” arguing the company is unlikely to receive a higher bid from another buyer. BTIG analyst Jake Fuller called Rocket’s offer for Redfin “aggressive” and said the success of the merged company would depend on its ability to grow by offering more services to homebuyers.

According to MarketWatch, 14 analysts cover Redfin: 13 rate it a “hold,” while one has a “buy” recommendation. Over the last 12 months, Redfin shares have gained 24%.