Compass Stocks Jumps 20% on Raised 2024 Outlook

Compass gave investors some positive news on Wednesday, raising its fourth quarter and full-year outlooks.

Its stock jumped over 20 percent following the announcement, reversing a more-than month-long tailspin. Earlier this week, Compass also announced that it closed on its $444 million deal for @properties and Christie’s International Real Estate.

The company raised its full-year revenue projections to $5.61 billion from $5.47 billion on the low-end, and to $5.64 billion from $5.57 billion on the high-end. Its full-year adjusted EBITDA projections has increased to between $124 million and $127 million from between $109 million and $119 million.

Compass also projected it will be below its low-end full-year operating expense projection of $876 million.

The improved numbers mean Compass expects to generate positive free cash flow in the fourth quarter, which has historically been a negative quarter for the company, CFO Kalani Reelitz stated in a release.

Compass also added over 650 principal agents in the fourth quarter, a 50 percent improvement from the year-ago period.

The announcement came hours before CEO Robert Reffkin took the stage at an investor conference.

Last week, Compass brought over “Million Dollar Listing” star Tracy Tutor and her 18-person team from Douglas Elliman, the latest agent to hop from one firm to the other. Compass previously told The Real Deal that it added 55 agents from Elliman last year.

Reffkin attributed some of the company’s outperformance to the firm’s less rate-sensitive customers.

“They don’t use mortgages and they receive interest income. They’re not payers of interest,” Reffkin said. “This interest rate environment, relative to a lot of our competitors, puts us at an advantage.”

The average home price transacted by Compass in the third quarter of this year was over $1 million, a category that saw sales grow by over 5 percent in the first half of the year, according to The Agency, despite overall home sales falling by 13 percent during that same time period.

While Compass’ stock rose 70 percent over the course of 2024, buoyed by its strong performance and activity in the M&A market, it had hit a lull as of late. After shooting up to a year-high $7.09 at the end of November, following the announcement of its deal for @properties and Christie’s, the stock sank over 17 percent to end the year.

Its stock is up to $6.80 at the time of publication.

Reffkin also said that Compass has made progress on its goal of 30 percent market share in its top 30 cities, stating that the company is in the 20 percent range in those markets.

Those metrics are part of a larger strategy Compass has put forward to scoop up as many listings as possible.

“The person that has the inventory is the source of all of the transactions,” Reffkin said. “And listings beget more listings.”

Compass wants to funnel those listings into its “three-phased marketing strategy,” which only involves a listing on the MLS in the final phase of marketing – something that is a challenge given the National Association of Realtors’ Clear Cooperation Policy, which requires listings to hit the MLS within one day of being publicly marketed.

Reffkin said he thinks that policy could be scrapped as soon as next month, in the wake of the Supreme Court ruling that the Department Justice can continue its probe of the trade group.

Reffkin also gave voice to a fear of many in the industry — that without CCP, it will be harder for small brokerages to compete with large ones.

“Agents at small brokerages, I believe, will be more interested in the value proposition of a large brokerage,” he said.