Rocket Companies Acquires Redfin: Not A Silver Bullet, But Longer Lifeline To Resurrect Real Estate Business

Gary Alexander
31.35K Followers

Summary

  • Rocket Companies, a leading mortgage originator, announced an all-stock purchase of Redfin for $2.36 billion in total enterprise value.
  • The company is expecting $200+ million of synergies from the deal, largely stemming from $140 million in operating cost savings (headcount elimination and marketing consolidation).
  • Still, I'm skeptical that Rocket has any top-line synergies to offer Redfin, which has seen a persistent decline in market share.
  • I'm rating the combined company at neutral. Wait on the sidelines until we see more evidence of synergies materializing, and real estate segment performance improving.

Redfin managed house sale

Sundry Photography

Fear has gripped the stock markets again, and though major transactions like IPOs and M&A seem frozen, one major transaction was recently announced: the major tie-up between Rocket Companies (NYSE:RKT), a digital mortgage lender, and Redfin (

This article was written by

31.35K Followers
With combined experience of covering technology companies on Wall Street and working in Silicon Valley, and serving as an outside adviser to several seed-round startups, Gary Alexander has exposure to many of the themes shaping the industry today. He has been a regular contributor on Seeking Alpha since 2017. He has been quoted in many web publications and his articles are syndicated to company pages in popular trading apps like Robinhood.

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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