What Happened?
Shares of real estate technology company Compass (NYSE: COMP) jumped 10.2% in the afternoon session after the company reported record-breaking financial results for its second quarter, outperforming a declining real estate market. The real estate technology company announced its GAAP Net Income grew by 90.3% year-over-year to a record $39.4 million. Compass also expanded its market share to a new high of 6.09%, attracting a record 832 principal agents during the quarter. The company's total transactions surged by 20.9%, a stark contrast to the wider market, which experienced a 0.9% contraction. This performance was underpinned by a 21.1% rise in revenue to $2.06 billion. Following the strong report, a UBS analyst raised the price target on the stock, reflecting renewed confidence.
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What Is The Market Telling Us
Compass’s shares are very volatile and have had 24 moves greater than 5% over the last year. But moves this big are rare even for Compass and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 5 months ago when the stock gained 24.2% on the news that the company reported strong Q4 2024 results, with revenue and EBITDA exceeding Wall Street's expectations. Transactions surged, outpacing the growth in the real estate market. In addition, Compass provided optimistic revenue and EBITDA guidance for the next quarter, both of which beat analysts' expectations, indicating momentum is improving. Zooming out, we think this was a good quarter with some key areas of upside.
Compass is up 35.8% since the beginning of the year, but at $7.88 per share, it is still trading 23.1% below its 52-week high of $10.24 from February 2025. Investors who bought $1,000 worth of Compass’s shares at the IPO in March 2021 would now be looking at an investment worth $390.82.
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