COMP Stock: Did Compass Just Signal a Housing Market Crash?

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Real estate brokerage company Compass (NYSE:COMP) fell 5% on Tuesday after a disappointing earnings call. For some economists, this is the long-awaited sign of an impending housing market crash. COMP stock is descending 6% again today as the housing industry weighs Compass’ second-quarter financial report.

One of the largest U.S. real estate brokerages, Compass reported minimal revenue growth of only 4% in Q2. The company reported sales of just $2.02 billion, below the Wall Street consensus estimate of $2.12 billion. Compass also announced plummeting adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of just $4 million, down from $72 million. Finally, it missed earnings per share (EPS) estimates, logging a loss of 24 cents, well below estimates of -14 cents.

Real estate has been in the midst of a slowdown in response to rising interest rates. As such, real estate companies like Compass are liable to suffer wider losses due to a slowdown in home purchases and reduced home price growth.

Compass CEO Robert Reffkin commented on the turbulence this past quarter:

“Compass continued to grow revenue in the second quarter despite extremely challenging market conditions. This performance highlights the strength of our agents and our commitment to enabling their success through superior technology and other programs.”