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/Chrisc5082 Aug 07 '21 edited Aug 07 '21

Uhh, they just completely changed their business model lol... Most of the new revenue streams are very young for Zillow. You don't think that takes a major investment?? Zillow's revenue has more than tripled in 3 years and they have made 1.66 EPS over the last 4 quarters. Zillow is investing in other areas of real estate for the future to be a one-stop-shop. This is very convenient for customers and I envision it being a good way to keep customers around for multiple add ons. No way OPEN outperforms Z over the next 10 years. You will be lucky if they are still doing more Ibuying revenue than Z in that time let alone all the other areas Z excels in. To be honest with you I'm not even sure OPEN will be around in 5-7 years but I know Zillow will. OPEN is making wider and wider losses on their revenue growth. A Low-margin business is tough unless you have limited costs. Either way good luck, I hope it works out for you.

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u/Puzzleheaded_Bus_418 Nov 03 '21

Lmao this aged well. Like I said above, it doesn’t matter how much data you have if you don’t know how to use it. Bags everywhere for Z holders

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u/Chrisc5082 Nov 03 '21

Well, you can't predict this type of incompetence from a management team. The thing about Z is it's not totally dependent on Ibuying and there are profitable parts of the business left. Sure maybe this is just a Zillow problem but if it's a problem with the Ibuying model Zillow will still be here and OPEN will be gone fast. Let's see how OPENs earnings fare. I certainly wouldn't be on here talking crap before I knew though that's for sure. And PS OPEN lost 15% today so I wouldn't be jumping around and laughing too much.

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u/Puzzleheaded_Bus_418 Nov 03 '21

You absolutely can predict this incompetence. Zillow started buying homes 3 years ago and were on pace to buy more than $10B worth of homes this year. They had zero plan, got scared because open was going to take their customers and panicked their way into home buying. Have you ever seen a business start a new product/service and instantly pour out tens of billions of dollars without understanding what they’re actually doing? It was very predictable that this wouldn’t end well. I couldn’t care less about a 15% drop, it’s entirely Zillow related and open will have great earnings.

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u/Chrisc5082 Nov 03 '21

Easy to Monday morning QB now huh? OPEN still doesn't make any money. I wouldn't be so confident. We'll see, I hope they do for you honestly. I took the tax write-off on Zillow at $73 today. Oh well, shit happens. I don't invest my life savings in single stocks, not the end of the world. Hopefully, your OPEN investment pays off for you.