RE/MAX stock soars another 12%

NEWS ALERT

Highlights:

  • Denver-based RE/MAX started trading Wednesday.
  • It went public at $22, higher than expected.
  • Closed on Thursday above $30

The trend continues.

Denver-based RE/MAX has been trading on the New York Stock Exchange for two days and both days it has been the second biggest percentage gainer on the NYSE.

It went public at $22, higher than the expected $19 to $21 per share. RE/MAX issued 10 million shares, raising $220 million.

On Wednesday, it closed at $27, a 22.7 percent first-day gain.

Today, it gained another $3.21, for an 11.89 percent jump, on a day that the S&P 500 and the Down Jones Industrial Average each fell 0.9 percent.

Since the franchise real estate company started trading, it has gained 37.3 percent. Some 2.45 million shares traded today. It traded as high as $31.08 today.

Not everyone is a fan of the stock, which trades under the symbol RMAX.

CNBC commentator Jim Cramer called it a “sell.”

Given the state of the economy, a falling equities market, and  a potential debt default that could be a disaster for the real estate market, Cramer was baffled why the IPO of RE/MAX went so well.

Cramer said he would prefer to avoid investing in a newly publicly traded company at this time, or in the real estate sector. RE/MAX, of course, is both. Cramer said he feels he is one of the few who is properly factoring in the potential downside to the shares of RE/MAX.

RE/MAX was founded in Denver in 1973 by Dave and Gail Liniger. They remain the largest shareholders, owning 61 percent.

Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

 

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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Comments

  1. Poll:

    What stock would you rather own today under the assumption you had to hold 1 year;

    MDC @$30
    Or
    RMAX@$30

    For me it’s a no brainier. I have to go with Crammer on this one. RMAX is trading at 7x last year’s revenue. Basically, not even in the same ballpark for any company with the growth rate of Re/max. Realogy trades at 1.5x to give context. But, it can still keep going up because the float is so low. If you buy, better be nimble enough to get out.

    • I dont know anything about reaology, and I dont know much aboutvremax stock, but I dont need to know much about remax to know that 7x 2012 revenues is nuts. I will short it if it gets to 34

  2. “Cramer was baffled why the IPO of RE/MAX went so well”

    Most likely because there is very few insiders selling share. The PE firm sold all their shares at $22. Other than the Linagers, Margaret Kelly and a few more senior execs, there are not any other sellers, just day traders’ playing in the sandbox with one another waiting for Aunt Millie to get excited and buy shares so they can dump them off. Re/max is just momentum trading not based on any fundamentals.

  3. More food for thought. In 2010 re/max sold a 15% stake in the company for $40m. That is a pretty good indication of the perceived market value of the company at that point in time. If it was worth more Re/max would have been able to get more money for the stake. I’m sure they shopped it out to other PE firms and this was the best deal out there. In re/max’s case, how much could have changed since 2010. How many agents have they added in that time? They are less dependent on the price of home and more dependent on the number of agents. Have the number of agents gone up that much to justify a 1b market cap. I think not.

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