Shares of eXp World Holdings (NASDAQ: EXPI) fell as a lot as 17% in early buying and selling on July 24. Though the stock had gained again some floor by 11 a.m. EDT, it was nonetheless off by practically 13%. There wasn’t any materials information out of the corporate, however buyers seem to have a minimum of briefly soured on the funding theme that is pushed eXp World Holdings’ stock up by effectively over 100% in simply three months.
It is a distinctive firm in a vital manner. On the floor it is an actual property firm, offering providers to actual property brokers. Nonetheless, it does this by way of the cloud, offering a “digital workplace.” So it is also one thing of a expertise firm. To be truthful, it has been rising fairly rapidly, with trailing 12-month income greater than doubling within the first quarter, 12 months over 12 months. However it’s nonetheless bleeding purple ink, posting a trailing 12-month loss within the first quarter. Sure, the decline wasn’t as unhealthy as the identical interval within the earlier 12 months, however this isn’t a extremely worthwhile firm. Buyers bidding the stock up are betting that it’s going to turn out to be worthwhile sooner or later.
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That wager is the important thing right here, because it seems to be tied into the work-from-home story that has taken maintain on investor feelings of late — eXp World Holdings is hardly the one stock that has been bid up sharply on this theme. Nonetheless, at present, it seems to be like buyers are taking a step again after materials good points, a undeniable fact that’s hit extra than simply this firm’s shares. This might merely be buyers taking some earnings off the desk, or one thing greater. There is no method to inform at this level. The important thing takeaway, nonetheless, is that buying and selling in eXp World seems to be pushed by investor sentiment proper now and doesn’t essentially mirror the underlying fundamentals of the enterprise. For instance, U.S. residence gross sales recovered dramatically in June from depressed ranges, however total they’re nonetheless being hampered by the impression of the coronavirus.
With COVID-19 nonetheless inflicting main life disruptions, long-term buyers have to assume additional rigorously concerning the stocks they select to personal. This is not to recommend that eXp World Holdings is both or unhealthy firm, however it’s to say that it is one which has been caught up within the work-from-home zeitgeist that is taken maintain within the enterprise and funding panorama. With historical past as a information, Wall Street has a foul behavior of taking issues too far when it will get a narrative it likes. If you’re taking a look at or personal eXp World, take the time to dig into the main points and ensure that is actually an organization of which you need to be an element proprietor. And whatever the reply, it’s best to count on volatility right here to proceed … and it might simply as simply be to the draw back because the upside.
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Reuben Gregg Brewer has no place in any of the stocks talked about. The Motley Idiot owns shares of eXp World Holdings. The Motley Idiot has a disclosure coverage.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.