Redfin’s Acquisition Is About Customer Acquisition, Not Revenue

Tuesday, March 11, 2025

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Redfin’s Acquisition Is About Customer Acquisition, Not Revenue

The surprise announcement came yesterday: Redfin is being acquired by Rocket Companies for $1.75 billion. The news sent Redfin’s stock soaring, as it had been trading at a market cap of around $500 million before the announcement. Meanwhile, Rocket Companies, the owner of Rocket Mortgage, saw its stock drop 15% on the news.

This is a hefty price to pay for Redfin, which generated just $244 million in revenue in the fourth quarter of last year and reported a $164 million loss for the year. It’s also a big gamble for Rocket, which has a market capitalization of only about $3 billion. So why did they do it?

Redfin has long played second fiddle to Zillow in the online listing space. Zillow, with its early-mover advantage, attracts more website traffic and has a market cap of $8.7 billion. While Redfin focused on building a full-service brokerage—using its site traffic to drive sales to its agents—Zillow has remained a pure listing portal, generating revenue by selling advertising to those posting on its site. Ultimately, Zillow has been far more successful in monetizing its traffic.

Redfin has even backed away from directly competing with Zillow. Just last month, it signed a $100 million partnership agreement making Zillow the exclusive provider of multifamily listings on Redfin and its subsidiary sites, Rent.com and ApartmentGuide.com. The deal provided Redfin with a much-needed cash infusion and improved its user experience by doubling the number of available apartment listings to 20,000.

Rocket isn’t looking to become a listing platform either. Instead, the company says it acquired Redfin to expand its audience for financing services. "Rocket and Redfin have a unified vision of a better way to buy and sell homes. Together, we will improve the experience by connecting traditionally disparate steps of the search and financing process with leading technology that removes friction, reduces costs, and increases value to American homebuyers," said Varun Krishna, CEO of Rocket Companies.

Rocket has multiple revenue streams, including a brokerage arm and licensing its technology to other real estate firms, but its primary driver is mortgage origination. It has been one of the fastest-growing mortgage companies in the country, thanks to its tech-first approach. Last quarter, it closed $27 billion in loans, a 61% increase from the previous year.

Rocket is betting that its nearly $2 billion purchase will help it reach more customers—a critical need in today’s market. Mortgage origination has been historically low due to high interest rates, and with signs that rates may remain elevated for some time, securing access to a steady pipeline of homebuyers could be a smart move—even if it means overpaying.

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Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

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