The real-estate company Redfin announced on Wednesday that it would lay off 862 staffers, or 13% of its workforce as it sees the housing contraction lingering into 2023.
Of the cuts, 264 of those are related to the company's home-flipping business, RedfinNow, which it will shut down, the company said in a financial filing.
An additional 218 staffers will have their roles eliminated, though they're being offered a new role within the company, Redfin said.
The announcement comes after Redfin's stock took a nosedive to a record low, after Oppenheimer analyst Jason Helfstein downgraded its stock to underperform and called the business "fundamentally flawed."
The company was already feeling the pain of the housing slowdown in June when it saw homebuying demand plunge 17% year-over-year, and cut more than 470 employees in response. Its quarterly loss nearly tripled in the the second quarter to $78.1 million from the same period a year earlier, and was expected to climb again. It reports third-quarter earnings on Wednesday.
In a memo to employees, CEO Glenn Kelman said Redfin's business outlook darkened from just a few months earlier.
"We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021," Kelman wrote. "The June layoff was a response to our expectation that we'd sell fewer houses in 2022; this layoff assumes the downturn will last at least through 2023."
Redfin was one of a handful of companies known as instant buyers, or iBuyers — deep-pocketed tech companies that use algorithms to make quick cash offers to home sellers. The business model, popularized by companies like Zillow and Opendoor, has suffered setbacks recently as companies struggle to offload homes at a profit.
A year ago, Zillow announced it would be shutting down its own iBuying division and laying off roughly 2,000 people, about a quarter of its workforce. At the time, Zillow estimated that it would be forced to write down as much as $569 million on the thousands of homes on its books.
Zillow's home-flipping unit, known as Zillow Offers, had been aggressively bidding on homes in an effort to gain market share and catch up to rival Opendoor, an Insider investigation found. That plan backfired when the company was forced to sell thousands of homes at a loss.
