Why eXp World Holdings Stock Sank 24.6% in March

What happened

Shares of eXp World (NASDAQ:EXPI) slumped 24.6% in March, according to data from S&P Global Market Intelligence. The online real estate brokerage and education software company has skyrocketed over the last year, but its stock sold off amid the widespread pullback for tech stocks that hit the market last month.  

EXPI data by YCharts

eXp World published its preliminary fourth-quarter results on March 2, and the report appears to have prompted a significant sell-off for the stock. The company published its fourth-quarter and full-year results on March 11, with sales and net income arriving in line with the preliminary figures, but the market responded positively to business updates and guidance.

So what

eXp World’s revenue rose 122% year over year to hit $609.3 million in the fourth quarter, and net income soared 885% to hit $7.7 million. The tech stock made substantial gains following the release, likely due to business updates and guidance indicating continued momentum. 

The number of agents and brokers on the eXp Realty platform climbed 63% year over year to hit 41,313. The company announced that the agent and broker count had climbed above 48,000 at the time of its Q4 press release. DA Davidson’s Tom White then published a note on eXp World on March 16, raising the firm’s one-year price target on the stock from $53 per share to $67 per share and maintaining a “buy” rating on the stock. 

Now what

eXp stock has continued to drop early in April’s trading. The company’s share price is down roughly 6.4% in the month so far. 

EXPI data by YCharts

The real estate and education services are markets are still at relatively early stages of much larger digital transformations, and the combination of favorable long-term growth outlooks for these industries and impressive momentum for eXp World’s business has helped push the stock up more than 1,110% over the last 12 months. Those incredible gains suggest the stock could be prone to volatility, but shares could also start to look cheaply valued at current prices if the business keeps delivering wins. 

eXp World has a market capitalization of roughly $5.9 billion and trades at approximately 2.1 times this year’s expected sales and 102 times expected earnings.