14 Worst 52-Week High Stocks to Buy According to Short Sellers

4. Redfin Corporation (NASDAQ:RDFN)

52 Week Range: $4.26 – $15.29

Current Share Price: $13.90

Short % of Shares Outstanding: 16.93%

Number of Hedge Funds holding stakes as of Q2 2024: 20

Redfin Corporation (NASDAQ:RDFN) is a real estate company that operates an online real estate marketplace and processes real estate services, including assisting people in buying and selling properties. The company also uses digital platforms to connect consumers with rental properties.

In 2021, nearly half of Redfin Corporation (NASDAQ:RDFN)’s revenues were generated through iBuying, a business that involved buying houses from sellers who were ready to sell them with the goal of making a profit by reselling them. However, the business became risky with the rise in interest rates to record highs.

Currently, Redfin Corporation (NASDAQ:RDFN) is concentrating on its range of services, which encompass property brokerage, mortgage services, and closing services. The firm has 1,719 lead brokers on staff, representing 0.77% of all properties sold in the US during the second quarter of 2024. Additionally, over a quarter of Redfin’s clients also utilized Redfin for their mortgage needs during this period, enabling the company to generate more income from each mortgage deal.

Even though the service business boasts a high gross margin, it is susceptible to an overheating real estate market that is crumbling amid the high interest rates. With few homes changing homes, given the reduced consumer purchasing power, the company is starting the risk of its revenue and earnings taking a significant hit.

With sales remaining sluggish because of high home buying costs that make both house hunters and prospective sellers skittish, investors are becoming increasingly skeptical about the company’s prospects amid the high interest rate environment.

Until mortgage rates drop to a level that can trigger a high rate of home buying, Redfin could remain under pressure, which explains the high short interest rate of 16.93%. According to Insider Monkey’s second quarter database, 20 hedge funds were bullish on Redfin Corporation (NASDAQ:RDFN), compared to 18 funds in the prior quarter.