Redfin Corp. (RDFN) shares climbed on its first day of trading.
The real estate buying and selling app made its public trading debut on Friday, and the company closed 44.7 percent at $21.70 versus its initial public offering (IPO) price of $15 per share. Shares were already up 30 percent at $19.56 by as early as 11:05 am ET.
The Seattle-based company entered the public market seeking to raise $138.5 million through the IPO, having sold 9.23 million shares and granted underwriters the option to buy additional 1.38 million shares, MarketWatch reports.
“We are excited to be here! This is a big day for Redfin,” Redfin CEO Glenn Kelman said on Friday. “But it’s not just about going public, it’s not just about making money, it’s not just about building a great business, it’s about making real estate better for regular people.”
The company earlier announced that it plans to use the net proceeds from the offering for working capital and other general corporate purposes, which include technology developments, marketing initiatives, administrative and general expenses and capital expenditures.
In late June, Redfin announced its plan to enter the stock market and filed an IPO with the U.S. Securities and Exchange Commission. Then in early July, the company disclosed its plan of selling 9.23 million shares of common stock with an estimated IPO price range of between $12 and $14.
Dubbed the “technology-powered real estate broker,” Redfin seeks to automate several facets of the real estate investing process, such as scheduling house tours and recommending real estate listings. It features a tool that comes up with estimates of home values, and provides helpful metrics like home sales, prices, buyer demand and inventory in monthly reports.
The company’s 2016 revenue was at $267.20 million, a 43 percent increase from $187.30 million in the prior year. Net loss was cut to $22.5 million from last year’s $30.2 million. It is investing heavily on technology, having spent about $34.5 million on its mobile app, machine learning capabilities and other proprietary technology services, Geek Wire reports.
According to TechCrunch, Redfin earns from a 1 to 1.5 percent commission off home sales that take place via the company’s website. “Redfin compares this to what it estimates is a 5 to 6 percent industry average, because agent payments can add up,” the report said.
The company, which was founded in 2004, is backed by technology investors like Madrona Ventures, Greylock Partners, Draper Fisher Jurvetson and T. Rowe Price, while Goldman Sachs led the IPO.
According to MarketWatch, Redfin is seeking a valuation of $1.2 billion with its IPO price of $15. To compare, another Seattle-based online real estate giant Zillow, which is not directly competing with Redfin, has a valuation of $8.6 billion.
The company’s real estate business is growing, capturing 81 of the 84 markets in which it is currently operating. However, its market share still stands at 0.58 percent nationwide. But Kelman is optimistic about Redfin and is confident that the company will change the real estate business sales model.
Kelman wants Redfin to be “the Apple of real estate,” and even compared the company to Uber and Lyft, as it instantly connects customers with realtors, CNBC reports.
“Our big project is to combine all the things we’re doing online with all the things we’re doing offline. The real point of attack is when they’re looking at a house on their mobile phone and want to see it right away, how the agent is getting people into properties faster,” Kelman said.
In 2016, Redfin’s affiliated sales agents and brokers were able to buy and sell over 75,000 homes in the U.S., which already represents about $35.3 million of the company’s $41.6 million revenue, Geek Wire report.