6 Reasons Zillow Is Still Extremely Overpriced
Jake Huneycutt • 33 Comments
Jake Huneycutt • 33 Comments
Zillow: Misunderstanding Fuels $770 Price Target
Weighing Machine • 26 Comments
Weighing Machine • 26 Comments
Sep. 3, 2015, 5:19 PM
- Zillow (Z, ZG) is selling its Market Leader real estate CRM software unit to a division of Canada's Constellation Software (OTCPK:CNSWF) for $23M. The deal is expected to close in early Q4.
- The sale price is a small fraction of the $355M Trulia paid for Market Leader in 2013. Zillow announced last month Market Leader's sales fell 21% Y/Y in Q2 to $12.5M, and that it's "conducting a strategic review" for the business. Job cuts were carried out in 2014.
Jul. 22, 2015, 5:29 PM
- DotLoop provides tools (available via subscription) that enable real estate brokers, agents, and other industry service providers to create, sign, edit, and store digital documents. Zillow (NASDAQ:Z) is buying the startup for an undisclosed sum.
- DotLoop currently has 124 employees in Cincinnati and San Francisco, and has raised $14M over its history. Zillow notes DotLoop's platform is an end-to-end solution, covering everything from "the creation of a listing agreement to the submission of offers to the actual closing." Personal, Business, and Business+ subscription packages are offered.
- Zillow CEO Spencer Rascoff: "We're incredibly excited by DotLoop's innovation and leadership in making digital transactions a reality. Now we will be able to make their technology more readily available to Zillow Group's 10,000 broker partners and the agents they represent, as well as our approximately 100,000 real estate agent advertisers, resulting in a smoother and more efficient transaction process for everyone."
- Yesterday: Zillow plans to issue non-voting Class C shares
Jun. 19, 2015, 12:32 PM
- Like Twitter, Zillow (NASDAQ:Z) is getting a lift from vague market chatter that it's a buyout target. 1.45M shares have been traded thus far vs. a 3-month daily average of 1.78M.
- Friday short-covering could be helping out: 16.8M shares (32% of the float) were shorted as of May 29.
- Oppenheimer's Jason Helfstein (Perform rating) issued a cautious note on Tuesday, arguing slowing traffic growth could put 2016 Street estimates at risk. "Per comScore, [U.S.] 2Q minutes are trending +3% y/y vs. +5% in 1Q and +30% in 4Q. To combat lower traffic, [management] will likely need to increase advertising, or test new products, at the expense of margin."
Feb. 17, 2015, 5:30 PM
- With the FTC having ended its review of the deal (as disclosed last Friday), Zillow (NASDAQ:Z) has officially closed its $2.5B all-stock merger with Trulia (NYSE:TRLA). The merged company will begin trading under Zillow's ticker tomorrow, and be known as Zillow Group.
- Notably, Trulia COO Paul Levine will run Trulia post-merger; Trulia CEO Pete Flint will join Zillow Group's board, as will former Trulia director Greg Waldorf.
- Zillow Group plans to cut 280 jobs in Q1 (mostly redundant sales/admin positions), and another 70 in Q2. Once the cuts are done, the company will have ~2K employees.
- Zillow rose 2.5% in regular trading in the wake of its Q4 report and FTC announcement. Trulia rose 3.1%.
Jan. 23, 2015, 11:27 AM
- Zillow (Z +11.6%) and Trulia (TRLA +13.2%) have skyrocketed in morning trading. The FTC staff has reportedly recommended approving the companies' all-stock merger.
- Zillow/Trulia agreed last year not to close their deal before Feb. 1, to give the FTC time to thoroughly review. Earlier this month, industry insider Brad Inman reported hearing the FTC would sign off on the deal (as has been generally expected). The combined company's share of online agent advertising has been in focus.
- Separately, Zillow has announced Zillow Pro for Brokers (a free program for real estate brokers that aims to improve listings and grow leads) now has over 5K nationwide partners, up over 2x since last July.
Sep. 3, 2014, 5:27 PM
- The FTC has made a second request for information from Zillow (NASDAQ:Z) and Trulia (NYSE:TRLA) regarding their planned merger. The companies say they're "gathering information to respond promptly to the second request."
- Though generally expected to be approved, the merger has caused some angst among real estate agents worried the combined entity will have too much market power.
- Zillow and Trulia have tried to soothe those concerns by promising their brands will stay independent, though ad services/marketing platforms will be integrated. The deal is expected to close in 2015.
Jul. 28, 2014, 12:47 PM
- Zillow's (Z -1.5%) purchase of Trulia (TRLA +13.3%) signals Zillow plans to create a portfolio of online real estate assets much as InterActiveCorp has created a portfolio of online dating assets, says CEO Spencer Rascoff. "What's taking shape is the creation of a real estate media company." Move (MOVE +8.9%) investors might be pleased to hear that.
- Though Trulia's brand will stay independent, Zillow and Trulia predict the deal will yield at least $100M/year in cost savings by 2016. Other expected synergies include: 1) Better real estate data for consumers thanks to data-sharing between Zillow/Trulia. 2) Common ad services/marketing platforms that can yield a better ROI. 3) Broader listing distribution.
- The companies note they still only account for 4% of estimated U.S. real estate marketing spend of $12B/year. Zillow has 83M monthly unique users, and Trulia 54M (some overlap exists).
- Street commentary has been quite positive. Macquarie: "This could pave the way to these companies becoming more profitable more quickly." CRT Capital: "At the end of the day, this provides scale. And scale ultimately leads to more advertising on the overall network."
- Prior Zillow/Trulia coverage
Jul. 28, 2014, 8:37 AM
- The combined company will maintain both the Zillow (NASDAQ:Z) and Trulia (NYSE:TRLA) brands, and Trulia CEO Pete Flint will remain so, reporting to Zillow chief Spencer Rascoff.
- As for terms, Trulia owners will receive 0.444 shares of Zillow for each share of Trulia they hold, valuing Trulia at a 25% premium to its Friday close.
- A conference call is set for 9 ET.
- TRLA +16.8% to $65.76, Z -2.6% to $154.70 premarket
Jul. 25, 2014, 1:53 PM
- "It's a blockbuster ... What this says is, Zillow has been and has locked up the absolute dominant position in online real estate in the United States,” says real estate analyst Steve Murray on reports Zillow (Z +4.6%) is looking to acquire Trulia (TRLA +2%).
- Barclays' Christopher Merwin predicts a merger would "dramatically increase the combined entity's pricing power" with real estate agents, and would yield more leverage in price negotiations with MLSs. Zillow just bought MLS data-integration software platform provider Retsly.
- Murray admits there could be a backlash to the deal, stating "the industry will be concerned ... if you have one huge, overwhelmingly dominant player" for whom agents "will be almost compelled" to list on.
- Bloomberg reports Zillow could pay for 1/3 of the purchase in cash (implies a $667M cash payment at a $2B acquisition price), and 2/3 in stock. Zillow had $446M in cash/investments at the end of Q1.
- While Zillow and Trulia continue to rally, Move (MOVE -2.8%) is now below where it traded before the first merger report broke.
Jul. 24, 2014, 2:23 PM
- A source tells Bloomberg Zillow (Z +18.8%) could value Trulia (TRLA +28.7%) at up to $2B in a deal. That would imply an acquisition price of ~$54/share.
- The source adds a deal could be announced as soon as next week. Bloomberg cautions talks remain ongoing.
- The rumored price represents a ~33% premium to Trulia's Wednesday close. Nonetheless, it values the company at 6x 2015E sales, a multiple well below the 12x sported by Zillow as of yesterday's close.
- Perhaps more importantly, there's plenty of enthusiasm on the Street for a deal that would create a clear-cut leader in what remains a very fragmented online real estate market that still only accounts for a small (but growing) fraction of total U.S. real estate services spend.
- Earlier: Zillow reportedly looking to buy Trulia
Jul. 24, 2014, 2:05 PM
- Bloomberg reports Zillow (Z +18%) is looking to acquire Trulia (TRLA +21.6%). Shares of both companies have skyrocketed in response. Move (MOVE +5.2%) is also getting a lift.
- The report comes 9 days after Realogy announced it's buying ZipRealty for a 100%+ premium.
- Zillow's market cap is currently at $5.9B, and Trulia's at $1.9B.
Jul. 16, 2014, 5:01 PM
- Vancouver-based Retsly offers a platform (replete with an API) that allows real estate app developers to integrate data from multiple listing services (MLSs), and also provides MLSs tools for managing and tracking real estate apps/data. (PR)
- CEO Spencer Rascoff: "Retsly's platform will spur tremendous innovation in the real estate space, enabling developers to build software that works across MLS boundaries and without the overhead of dealing with local data formats."
- The purchase price is undisclosed. Zillow (NASDAQ:Z) plans to add Retsly's offerings to its Tech Connect program (launched last November), which allows 3rd-party software/service providers used by brokers and agents to integrate their systems with Zillow's. The company recently announced it now has 25 Tech Connect partners.
Jul. 15, 2014, 4:15 PM
- The online real estate space heats up some more with Realogy's (NYSE:RLGY) all-cash, $166M deal to buy ZipRealty (NASDAQ:ZIPR). The price works out to $6.75 per share vs. today's close of $3.02.
- The purchase adds ZipRealty's residential brokerage operations with 23 U.S. offices and its integrated real estate technology platform to Realogy's operations. ZIPR last year closed $2.7B in property sales, giving it $76M in revenue and $32M of gross profit. Realogy expects EBITDA contribution from the purchase to be about $20M annually within the next three years.
- Zillow (NASDAQ:Z) +0.3%, TRLA +0.4%, MOVE +0.3% AH
Nov. 14, 2013, 11:33 AM
- Wells Fargo reports Realogy (RLGY +3.3%) execs downplayed the possibility their company or a rival would acquire an online real estate platform such as Trulia (TRLA -3.5%) during an investor meeting yesterday.
- Realogy pointed out such an acquisition would likely lead rival real estate brokers to pull their inventory from the acquired company.
- Previous: Trulia jumps following Realogy M&A rumor
Nov. 13, 2013, 3:13 PM
- A rumor that real estate services giant Realogy (RLGY +1.3%) is looking to acquire Trulia (TRLA +8%), perhaps for $52/share, has led Trulia's shares to spike in afternoon trading.
- Zillow (Z +3.9%) is also up strongly on the day. Both Trulia and Zillow were already rallying on what has been a good day for Internet momentum plays.
- 15% of Trulia's float was shorted as of Oct. 31.
Aug. 19, 2013, 7:23 AM
- The offering will consist of 2.5M shares of freshly minted stock along with more than 2.5M shares being offered by certain existing shareholders. The greenshoe option is for about 750K shares. The current float is 34.55M shares.
- Zillow (Z) is also acquiring NYC real estate website StreetEasy for $50M in cash. The site attracts nearly 1.2M monthly home shopping users in the New York region. "Simply put, StreetEasy has cracked the code in New York," says Zillow CEO Spencer Rascoff, who has called New York City a "glaring hole" for his company.