Zillow (Z) is down but not out
Zillow (Z) shares got a swift kick in the nuts thanks to soft Q4 guidance. Q4 guidance is for revenue of $30M-$31M, below a $32.5M consensus. Q4 adjusted EBITDA expected to total $3M-$3.5M, down from Q3's $7.6M.
This is typical Wall Street short-sightedness and a great opportunity to load up on shares below $30.
Here is what investors should be focusing on. Revenues were up almost 67.5% over the year ago period. For the quarter, Zillow reported record third quarter revenues of $31.915 million, which beat analyst estimates of $31.66 million. On an earnings per share front, the company reported a profit of 7 cents per share, matching expectations. In the year ago period, Zillow reported revenues of $19.057 million, and a 2 cent per share loss.
What a lot of investors don't realize are the reasons why Zillow lowered guidance. Zillow is switching from making money primarily on advertising to making money by providing leads to real-estate agents and mortgage lenders. This sounds smart in the long term, because lead generation is a business that adapts much better to mobile, and Zillow is now getting more views of homes on mobile than it is on its desktop website.
Also, Zillow is taking foreclosure listings in-house. To expand its database, Zillow now gets data from county records on foreclosed homes and lists them on its site for buyers for free. It used to sell ads to a company called Foreclosure.com. That revenue has gone away.
Mastery Bottom Line:
Make no mistake, Zillow is still a speculative stock. However, if the housing market is truly bottoming out like many think it is, now is a great time to get in. If you've used Zillow you know how powerful a tool it is. I for one can't imagine buying real estate without it.
Best of the Blogs
Scanning and identifying the best blog entries every hour
- An IoT "Cannon" To "Bring Down The Web" Can Be Yours For Only $7,500 | ZeroHedge
- Welcome To The George Orwell Theme Park Of Democracy | ZeroHedge
- Case-Shiller Home Prices Rise To 2006 Record Highs | ZeroHedge
- The Chinese Buyers Are Back: China Oceanwide Acquires Genworth For $2.7 Billion | ZeroHedge
- Dollar Breakout Sends Chinese Yuan To Lowest On Record In Offshore Trading | ZeroHedge
- Twitter Planning To Fire Another 8% Of Workforce, "Losing Talent" Fast | ZeroHedge
- US Futures, Global Stocks, Metals Rise On Economic Confidence, Upbeat Earnings | ZeroHedge
The most relevant financial news and articles from the Internets
- If you love technology, you need to watch 'Black Mirror' on Netflix | Business Insider
- Stop going online if you wake up and can't get back to sleep — it's not helping... | Business Insider
- Airbnb is driving billions of dollars in sales... | Business Insider
- 5 common mistakes rookie managers make — and how to avoid them | Business Insider
- Tesla's big solar roof unveiling will happen on Friday (TSLA, SCTY) | Business Insider
- The odds of alien life are ‘fundamentally infinite’ — according to world famous astronaut Chris Hadfield... | Business Insider
- Who are the world's most innovative CMOs? Submit your nominations now | Business Insider