EXPI analysis

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.


Hi CloudL

If you are not good at timing (not that I know anybody who is), try to enter a stock gradually. I understand you went from a 0% to a 15% in EXPI in just one day. With 6 stocks that’s about the average position.

If you have a small portfolio (which doesn’t seem to be the case) you could even use fractional shares.

If you are an investor and not a trader, it shouldn’t matter to you if you average up your buy price over the next couple of weeks/months.
If the stocks goes down after the initial starter position, either it is company specific and you may want to revisit your thesis (and you’re happy to not have a big position yet), or it’s the market’s irrationality and you get to buy your company at a lower price.

I’ve never regretted to slowly grow a new position. I have regretted doing it in a hurry every single time I did.




Hi Zilba25,

When I said I am bad at market timing, my point was "Don’t do market timing. It’s unproductive. "

At the risk of being OoT, I want to give more understanding to hyper-growth investing for those who are reading this. Hyper growth investing is a paradigm shift coming from traditional investing where the expected return is merely 10% per year from the index. Let me explain why I am not worried about today’s 10% drop. And why I bought EXPI in one shot instead of dollar-cost average.

I focus on extreme hyper-growth stocks with 80% to 100% revenue growth per year. The stock price increase is directly related to revenue growth. The higher the sustained revenue growth rate, the higher percentage of the stock price increase. If the revenue increases 100% per year, the stock can increase 100%, 300%, 500% per year depending on if the initial valuation is low.

In EXPI case, the valuation is currently on the low side. Using current quarter revenue of 564M x 4 = 2.2B. Market cap 4.7B / 2.2B = 2.1 ! This is extremely cheap. If a SaaS growing revenue at 100%, that ratio will be at least 100! Zillow’s ratio is 10. If EXPI has Zillow’s ratio, its market cap should be 25B now and increasing in the future. My method assumes static revenue. It’s easy to calculate and just a different yardstick than the traditional formula which assumes the revenue continues to compound for the next 12 months. e.g. Market cap/ Forecasted TTM revenue.

So, what if a stock with 100% revenue growth per year dropped 10% today? 10% drop is 1/10 of the expected annual return. It’s equivalent to SP500 dropping 1%. It’s not a big deal! In reality, due to EXPI’s low valuation, I expect its stock to increase far more than 100% per year for the next 2 years due to its super cheap valuation.

If I purchase 100% grower in one shot, in the short term, their price will likely pull back and I experience temporary paper loss. For example, I built a 20% position in SNOW. The current stock price is 10% below my cost. Am I worry? No. 10% paper loss is a small number for a 100% grower. When the next earning is released, I expect its price will pop again. In the case of EXPI, I expect the price will rebound even before the next earning because they constantly releasing good news.

Another reason: I purchased lumpsum because I regret I didn’t buy enough shares in early 2020 in ZM, PTON, CRWD, etc so many winners. I did just purchased a few shares each. Tiny positions in strong conviction companies are wasted positions. They are not going to move the needle much. Fast grower’s stock prices can move very quickly at any time. By the time you want to add, they already went up so much. I have no regret to sold out of DDOG, ZM, DOCU completely and focused on 100% growers.

Also, I am not in accumulation stage, and don’t have additional employment income to add to positions so I don’t dollar cost average. If an investor has a job and in accumulation stage, dollar cost averaging is a natural thing to do.

Despite my bad timing on SNOW, and EXPI, my portfolio is up 17.63% in December so far.


Hi, CloudL-

EXPI’s current year growth rate is great (75% according to Yahoo finance). The projected next year growth is only 33%. Even assuming they sandbagged, it is hard to believe they will continue to grow at 100%.

As far as the P/S ratio is compared, we have to factor in growth margin, otherwise it is comparing oranges to apples. EXPI has a very low gross margin of 5.75%m while Zillow has a gross margin of 37.5%, 6.5 times of that of EXPI. Most of the high growth SaaS stocks discussed on this board have gross margin greatly exceeding 70%. EXPI is not that attractive when you factor in gross margin.

One advantage of EXPI over many high SaaS growers is that it is currently profitable. One last point, EXPI have performed very well, especially since November 2020, which shows that it is highly valued by investors.

One note, the data used in my evaluation are all from Yahoo finance, which may or may not be accurate.