What Happened?

Shares of real estate technology company Compass (NYSE:COMP) jumped 13.8% in the afternoon session after the company reported impressive third-quarter results. Compass provided an optimistic EBITDA forecast for the next quarter, which blew past analysts' expectations. Its EPS also outperformed Wall Street's estimates. 

On the other hand, its revenue missed. Regardless, the improved bottom line metrics are commendable amid a challenging macro environment, which management categorised as "a multi-decade low for existing home sales." Overall, we think this was still a solid quarter with some areas of upside.

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What The Market Is Telling Us

Compass’s shares are extremely volatile and have had 53 moves greater than 5% over the last year. But moves this big are rare even for Compass and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 6 months ago when the stock gained 18.6% on the news that the company reported first quarter results that beat analysts' revenue and adjusted EBITDA expectations. Notably, the company recorded a 7.1% growth in transactions despite a 3.5% decline for the entire residential real estate market in the first quarter, as reported by the National Association of Realtors. Guidance was also encouraging as next quarter's revenue guidance came in higher than Wall Street's estimates. Overall, this was a solid quarter for Compass.

Compass is up 78.4% since the beginning of the year, and at $6.32 per share, it is trading close to its 52-week high of $6.59 from September 2024. Investors who bought $1,000 worth of Compass’s shares at the IPO in March 2021 would now be looking at an investment worth $313.40.

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