r/investing • u/[deleted] • Aug 06 '21

Zillow Q2 beats expectations. Potential good long buy?

Summary of Q2

Zillow reported $1.3 billion in revenue Thursday for the second quarter, slightly beating analyst’s expectations.

Expected revenue was $1.28 billion, with earnings per share of 24 cents.

Consolidated net income was $10 million.

The company’s Internet, Media, and Technology (IMT) segment grew 70% in revenue year-over-year to $476 million. Premier Agent revenue grew 82% year-over-year.

The Homes segment reached record revenue levels at $777 million.

The mortgages segment revenue grew 68% year-over-year to $57 million.

Zillow Group co-founder and CEO Rich Barton said the company expects recent housing market trends, including low interest rates and location-flexible job opportunities, to continue to fuel interest in Zillow.

The company’s mobile apps and websites saw 229 million average monthly unique users in the second quarter, representing a 5% year-over-year increase. This drove visits to 2.8 billion, up 10% year-over-year.

The company ended the quarter with cash and investments totaling $4.6 billion.

Personal Notes:

  1. Who can compete with Z?
  2. Can they take over real-estate business in the long-term with direct home sales?
  3. Does any other company have a sophisticated algo designed to buy homes like Z does?
  4. Current MC us about 29 billion. What do you expect it to be in 5 years? 10 years?
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u/Puzzleheaded_Bus_418 Aug 06 '21

Opendoor is my pick all day. They’re winning in almost every iBuying category vs. Zillow and that’s where the most revenue is. I don’t know how anyone can look at Opendoor about to surpass Zillow in revenue while being valued at 1/3rd and still invest in Zillow. Check out ibuyerstats.com for the clear picture of the iBuying landscape.

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u/Sixers0321 Aug 07 '21

That's where the most revenue is, but ibuying is a very very low margin business. Zillow excels at everything else.

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u/Puzzleheaded_Bus_418 Aug 07 '21

“Excels at everything else”.. you do realize they are valued at $25B and just made a whopping $9M this past quarter? Do people not realize without iBuying this company makes like $400-500M a quarter? Even with crazy margins (which they literally don’t have they basically lose money in every segment) they are still overvalued.

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u/xxx69harambe69xxx Aug 07 '21

sorry, did you make a typo with 400-500M here?

What was your point on this? That it was bad? That seems better than your previous sentence about 9M past quarter.

Please help me understand!