Amazon and Realogy’s new partnership sent the real estate giant’s stock price and market cap soaring on Tuesday — but some analysts warn that it may be short lived.
After the program, dubbed TurnKey, was announced early Tuesday morning Realogy’s stock prices soared 31 percent in premarket trading. The stock opened at a recent high of $6.44 per share and fluctuated throughout the day before closing at $6.18 — up 19 percent from $5.18 the previous day. Still, it’s a far cry from Realogy’s stock price a year ago, which was $22.61.
The conglomerate’s market cap — which this year fell below $1 billion for the first time — also jumped 19 percent, closing at $705 million on Tuesday.
See the chart below to follow Realogy’s journey so far this year.
Stephens analyst John Campbell described the TurnKey deal to Seeking Alpha as “a highly strategic chess move that strengthens RLGY’s market position amidst an industry that was threatening to leave it behind.”
But Barclays’ Matthew Bouley called the stock price action a “short squeeze” that’s “likely limited” due to the competitive brokerage landscape in a Tuesday report. The financial services company notably downgraded Realogy’s stock to a price target of $5 from $9 after Realogy filed an explosive lawsuit against Compass earlier this month.
Compass Point’s Chris Gamaitoni echoed Bouley calling TurnKey “undoubtedly positive for volume opportunities but economics seem unclear.”
Meanwhile, Jason Deleeuw, an analyst for Piper Jaffray, who maintains the highest price target for the stock at $11 of the four analysts, said TurnKey “could meaningfully boost lead generations” and “ease pressure” on agent recruitment and commissions splits.
Year-to-date, Realogy’s stock has dropped 65 percent compared to the S&P 500’s increase of 19 percent. Realogy’s CEO Ryan Schneider said in an interview late Tuesday he had not yet looked at the company’s stock price.