Zillow Homes Could Be A Home Run

About: Zillow Group, Inc. (Z)
by: Gainsboro Capital
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Gainsboro Capital
Growth, long-term horizon, long only, contrarian

Zillow is attempting to take a slice of the country's home transaction value through Zillow Offers - a feat which we believe they have the potential to achieve.

This new business model would force Zillow to cannibalize its current advertising business and absorb new, larger risks.

Today, risks in the new segment are high, specifically in execution and macroeconomics - yet we believe these are manageable going forward.

Fortunately, if Zillow is successful, the capital-intensive business endeavor could provide today’s shareholders with enticing returns.

We see the risk-reward trade-off as positively skewed, making for a potentially attractive investment for patient, long-term shareholders.

Zillow (Z) has been in the business of providing real estate professionals (“REPs”) with lead generation and other marketing solutions. On the flip side, the platform has allowed homeowners to obtain Zestimates,