๐๐ก๐จ๐ฎ๐ฅ๐ ๐ฒ๐จ๐ฎ ๐๐ฎ๐ฒ ๐ญ๐ก๐ ๐๐ข๐ฉ ๐จ๐ง $Z (Zillow Group Inc) ?
๐๐ก๐๐ญ ๐๐๐ฎ๐ฌ๐๐ ๐ญ๐ก๐ ๐ฌ๐๐ฅ๐ฅ ๐จ๐๐?
Zillow announced it was closing its home flipping business in its most recent quarterly earnings. The business was to use an algorithm to generate offers on houses, do light touch renovations and then sell for a profit skipping agent fees. Unfortunately, accurately predicting house prices proved too difficult for Zillow. The home segment made up around 2/3 of Zillows revenue but was unprofitable. This has caused Zillow's shares to drop over 30% in the last couple of weeks.
๐๐ก๐๐ญ'๐ฌ ๐ฅ๐๐๐ญ?
Despite being 2/3 of Zillows revenue, the home business was not 2/3 of Zillows value. The home business could only ever have achieved a mid-single digit margin, as opposed to the rest of Zillow, a real estate platform which aims to digitise the act of home buying/selling, with EBITDA margins of roughly 40%. Zillow is aiming to be a one-stop-shop, with the entire process of selling or buying a home done from Zillows platform.
๐๐ก๐๐ญ'๐ฌ ๐ข๐ญ ๐ฐ๐จ๐ซ๐ญ๐ก?
The rest of Zillow is growing at around 20% per year, and now that Zillow has dropped the home buying business it can focus more capital on its platform. EBITDA for the IMT/Mortgage business is expected to be around $800 million per year, growing at a rate of roughly 20%, and no debt. Valuing the business at 30x EBITDA gives a value of $24bn, or $94 per share.
๐๐ฎ๐ฆ๐ฆ๐๐ซ๐ฒ
To conclude, Zillow has closed it home business, but the rest of Zillow is worth a lot more than the market believes!
~Lordfoofoo
๐ ๐๐๐๐ข๐๐ข๐๐ฅ ๐๐๐จ๐ซ๐จ ๐๐๐ฅ๐ฎ๐ ๐๐ง๐ฏ๐๐ฌ๐ญ๐จ๐ซ ๐ ... Show More
-14% in November ? This is very disappointing... I had so much hope in your performance but this is literally the worst crash in my portfolio. An explanation ? No message since 26 days...... Show More Translate