Redfin bought RentPath for $608m in cash. Since then, Redfin has dropped 84%.

This is the definition of a bad deal. The strategy was sound. Redfin wanted to add rentals fast instead of building it from scratch. But the price and the way it paid for RentPath is the reason why I wouldn't invest in Redfin. They don't make good decisions.

Redfin purchased RentPath in an all-cash deal for $608m on Feb 19 when its stock price was $96, an all-time high. Instead of trying to purchase RentPath with stocks, it did by using 1/3 of its total cash on hand.

At $608m, it was 6% of Redfin's market cap on Feb 19. Today, Redfin's stock price is $15.73 and has a market cap of 1.67B. This means the price paid for RentPath is now 39% of its total market cap.

RentPath was a company in bankruptcy.

Total insanity.

Now Redfin only has $750m in cash instead of $1.35b while they lost $100m in 2021. We're heading into a prolonged bear real estate market due to rising interest rates. I don't see how Redfin can invest in its tech and continue to grow in the foreseeable future.

This decision is going to hamper Redfin for many years.