Zillow, Inc. (NASDAQ:Z)

CAPS Rating: 2 out of 5


Player Avatar TKite (59.05) Submitted: 7/21/2011 1:53:03 PM : Outperform Start Price: $35.86 Z Score: +7.05

This new IPO is sooo misunderstood by the fools (market foolery 7/21/2011).Zillow fills a critical void in the home buying process. It gives buys real data. Yes there are data integrity issues and yes the Z-estimate is not pinpoint accurate. What it does have is great macro data about towns and neighborhoods. Often good data on specific homes.While the Zestimate is a focus, the range is also listed and equally important. Real comparibles are show, sale information... geez this sounds like an ad. to sum it up... i've found it to be usefulll and it kept me from buying an overpriced house as the bubble popped."All forecasts are wrong, but some are useful"I trust realtors as much as the mortgage broker who told me to list my 401k on a loan app to boost my loan amount. MLS does have much of this data but does not make it available to the consumer for free because doing so would undercut the realtors that it supports. This will outperform because it provides real value to the end consumer. Realtors will continue to pay ad fees and increase revenue as consumers flock to this independent service.

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Member Avatar TSIF (99.96) Submitted: 7/21/2011 2:40:31 PM
Recs: 2

Hi TKite, welcome to CAPS....you are doing a good job out the gate explaining your point of few from a company perspective. Please note that many of us who downthumb Zillow may agree with your points about the value of the site to the public. The other piece to investing, however, is putting a value on an equity that gives you a risk/reward for putting your cash on the table. What most of us are questioning is the limited data, the profitability of the company, relying on advertising in a weak housing market, etc. A company can issue shares at any price they want on an IPO, but that doesn't mean the company is worth the price. And the early demand has driven this up to twice what the company and the underwriters believe is intrinsic value. Their job is to "sell" the stock, so their entry points are even higher than a real intrinsic value.

So the point is that while you make a good pitch for the usefulness of the site and why the company as a whole is useful to the public, it doesn't attempt to value the company. While the IPO fetish may keep Zillow inflated and while this might be a good entry point, the odds are, and the view of most of the CAPS players is that the current valuation is NOT a good entry point for a hard cash risk/reward play.

Good luck.

Member Avatar cubanstockpicker (21.06) Submitted: 7/25/2011 9:44:47 AM
Recs: 0

"Zillow fills a critical void in the home buying process. It gives buys real data." INO IT DOESNT.

Thats what appraisals are for. Banks do this through their own internal systems which reads public data of purchase information from most recent homes.

An appraiser goes to the tax roll, like Zillow, like you can publicly and free.
They look for all homes within a 1/4 mile radius sold in the last three months. If he finds none, he goes to 6 months, then one year.
Then they go with a 1/2 mile radius.

The three properties they find that closest match the property being purchased are listed.

The appraiser can also see the declin in value. Zillow does that by reading similar information.

The critical point is, you, as a buyer, will never have a need of Zillow except to help you check up on a home purchase(thats a free zillow service).

If you have a real estate agent, you cna call or email them the list of addresses to verify the MLS information adn they can make the appointment directly since Zillow reads MLS DATA, again, Zillow misses.

Zillow fills no critical process whatsoever in the purchasing of a home. It doesnt provide appraisals, inspections, surveys or any other information useable by banks. Now, if they can get that business, which they wont, then the stock is worth way more than it is now.

I hope they do dont shut it down though, i like seeing the red and green houses in my neighborhood. Cool tool, worth a little but easily replicateable, repeatable.

Member Avatar OklaBoston (66.26) Submitted: 11/12/2011 12:08:25 PM
Recs: 0

Great gross margin, but as with most stocks this newly public the valuation numbers are from skunksville. It should be available much cheaper in a month or two.

Member Avatar OklaBoston (66.26) Submitted: 1/24/2012 2:09:59 PM
Recs: 0

Valuation numbers still lousy, and money flow has gone negative. This is actually worth only about $13 despite the bright prospects, unless earnings are better than consensus forecasts.

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