Someone already introduced EXPI a few months ago. It didn’t grab my attention because I had 30 stocks portfolio. Now I focus on just 6 stocks. So, I have time to look into it. This is the benefit of owning just 6 stocks!
Here are some key points I observed:
-eXp Realty earned a 73 global Net Promoter Score, a measure of agent satisfaction, through an intense focus on the agent experience.
-The business model is agent centric, agent success obsessed.
Agents work for themself not the company after a max $16000 company cut. The more deals they make, the more money they make. Commission structure favors agents. The company portion is capped at $16000 per year. They recently acquired SUCCESS Enterprises. I believe this was for training/motivation purposes. I see agents as customers of EXPI. I see house buyers/sellers as customers of agents. Agents brand is agent themself. Their performance determines their success. EXPI just provides a real estate platform tool for agents to operate. Agents have an incentive to succeed for themself.
-International expansion. Canada, India, France, Mexico, Portugal …
-Total addressable market: think in terms of numbers of agents in the world. 40,000 /5 millions = 0.8% of market 'penetrated. Lots of room for future growth.
-Strong balance sheet. Cash/total debt = 50%
- Positive operating income. Improving net income. Net income turned positive during the last few quarters.
I see it’ll continue to sign up new agents rapidly for the next few years.
EXPI grew revenue faster than ZILLOW, REDFIN both historically and currently.
Redfin was growing at 30% and accelerated to 60% and plateaued recently.
Zillow was growing at 20% to 30%. From 2018 to 2019, Zillow grew 100%. It seems plateaued and revenue declined 3 quarters in a row.
Realogy: declining for a few years.
Note EXPI was growing at 100% before COVID. It’s not a COVID stock. COVID dent its growth for 1 quarter. Its revenue dropped just a tiny 1% and then roared back and resumed hyper-growth. It got a small tailwind during the last few quarters as PTON did.
How did it grow rapidly consistently over the years? Excellent agent incentive is the biggest reason. The second reason is the cloud-based training/operating. No brick and mortar office. Low overhead cost. Less traveling. Less commute cost. It’s just more efficient overall.
Even I am no longer working for a job. For a few seconds, I had the thought of becoming a real estate agent with EXP world because it seems so convenient but then I realized I don’t need that extra money. Investment in hyper-growth is sufficient to provide me a good standard of living.
Sold: AHCO and took a 15% position in EXPI today. AHCO is still in a decent position for the next 2 to 3 years but I like EXPI real state products better than hospital beds, incontinence products, etc. I generally don’t like to profit from sick people. EXPI is also a disruptive force in the real estate industry rather than some chain stores selling home health products. EXPI total address market is also greater than AHCO.
Today EXPI took a beating right after I bought it. It’s down -13.68%. I had no idea why the market suddenly decided to sold off so many stocks and bought SP500 and other “value stocks”. i am not scared because my whole portfolio is still up around 80% year-to-day vs SP500 is just up 16%. I am just not good at timing. It seems lots of short-sellers are taking advantage of vaccine news to short any stocks with a “work from home” tag. They have mistaken EXPI for ZM. EXPI has just started to expand where ZM has saturated the market. It was ignored by the market for 2 years! It was just started to get attention this year because of the COVID work from home tag. Just read the EXPI investor relations page, they keep acquiring new companies and expanding into more and more countries.