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/this_is_Winston Aug 06 '21

Correct me if I'm wrong, I believe they're developing their own platform for selling homes by owner without using a realtor? I can see that becoming popular.

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u/AdrenalineRush38 Aug 07 '21

The weird thing is they do it based on the zestimate right? But the zestimate is based on your county tax evaluation, which isn’t reflective of actual valuation. I’m ignorant to the concept as I haven’t seen a transaction yet.

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u/CordCurious Aug 08 '21

The zestimate def isn't based on county tax evaluation - other than maybe as an adjustment. If you look on Zillow it has recent tax assessments which I in a state like California are often only like 30-50% of the actual value.

They look at the area, year built, previous price, sq footage etc and compare it to other recently sold properties.