eXp World Holdings (NASDAQ: EXPI) has revolutionized how residential and commercial real estate brokerages can operate. Being the only 100% virtual brokerage -- with zero offices and, now, over 60,000 agents across six continents -- their model has changed the game.
Even before pandemic challenges pushed homebuyers and sellers online, the company was achieving tremendous growth. But the last few quarters have truly exploded, putting eXp World Holdings on investors' radars. Let's take a look at where eXp World Holdings could be over the next few years.
A hot market means hot growth, but will it last?
The real estate market has been on fire for the past year. The housing shortage and low-interest-rate environment have pushed home prices to record levels. This is great news for a company like eXp, particularly because their business model thrives in the post-pandemic consumer and Realtor world, offering full brokerage services virtually.
The company's real estate transactions are up 164% year-over-year, net income increased 350%, and revenues increased 183% to a new record of over $1 billion.
It's clearly been a great year. But hot real estate markets like we're seeing today don't last forever. There is a growing concern over a rebalancing of the housing market in the near future as hundreds of thousands of loans in forbearance expire in 2021 -- which, undoubtedly, would stunt continued growth, particularly in the USA and Canada, its dominant markets.
The company is diversified, with both commercial and residential real estate, across 18 countries, having added Israel, Colombia, Spain, and Germany to its roster, with plans to expand into Japan by year's end.
eXp is continuing to gain more market share of real estate transactions as they grow. From the second quarter of 2020 to the same quarter in 2021, the company saw the number of agents grow by 85%, making it the fastest-growing real estate brokerage currently.
Its business model -- offering the ability to work 100% remotely and benefit from its revenue-sharing and equity programs -- appeals to a growing number of agents. The more agents they have, the more customers they can reach, and the more transactions they can conduct.
eXp World Holdings issued its first dividend payment in Q3 2021, which will likely be the first of many. Personally, I wouldn't be surprised to see the number of eXp agents double over the next three years. I believe the company will continue to add new countries to its global footprint, although unlikely at the rate we've seen over the last two years. Instead, the expansion will likely come from increasing the number of agents in its reach within the countries it operates.
In most instances, that directly translates into share price growth -- something that will likely, almost undoubtedly, happen with eXp. But it's important for investors to understand the company's stock policy for agents, which issues the agent a certain number of shares based on transactions conducted.
This means the more agents they get and more transactions are conducted, the more shares are issued, diluting the share value to a degree. The company does have a share buy-back program to help offset dilution, but it's a unique model that should be considered before investing.