REA Group shares experienced a significant drop, plummeting 8 per cent in the initial hour of trading. This decline followed the release of the real estate listings giant’s first-half results, which fell slightly short of market expectations. A higher tax rate contributed to the profit falling below Citi’s estimates. REA Group operates leading property websites, connecting a global audience to property and real estate services. They are known for their portfolio of established online and real estate businesses.
Citi analyst Siraj Ahmed pointed out that core profit increased year-on-year to $341 million, but this was still 1-2 per cent below consensus forecasts. Earnings before interest, taxes, depreciation and amortisation (EBITDA), however, matched expectations. The analyst highlighted concerns regarding weaker national listings, which were down 8 per cent year-on-year in January, and negative operating jaws in Australia, where costs increased at a faster rate than revenue.
Ahmed suggested that the weaker listings outlook, reiterated operating expense guidance, and a higher tax rate could lead to a low single-digit consensus downgrade to the financial year 2026 net profit. This revision reflects concerns about the company’s near-term performance amid challenging market conditions.
While the announcement of a $200 million buy-back was viewed positively, concerns about potential profit downside risk suggest that the shares may underperform. The stock was last down by 7.7 per cent, placing it $18 above its 52-week low.