Zillow’s had a love fest with Wall Street that made it an unprofitable $5.8 Billion over-valued Wall Street wonderturd for months and months. (You can quote my opinion on that. I neither own Zillow nor do I have any positions selling them short. There are no forward looking statements, just my own assessment of a pipe dream who has needed to put down the pipe for quite a while). Seriously. I blogged earlier this year that most all of the agents who do business with Zillow are more profitable that it is. And yet Wall Street persisted in creating a HUGE bubble out of what it perceived as the only game in town to potentially create an online real estate syndication monopoly.
Now there is an alternative. Bought relatively cheaply. So I was wrong.
Watching Wall Street react to the sale of Move Inc to News Corp (price of Z has dropped significantly), I hereby retract my previous thought that this will not mean much. 😉 I am struck by a few things.
1) Wall Street is looking at the potential synergy that News Corp MIGHT have with their newspaper website holdings. And they see that this gives Zillow a competitor. A PROFITABLE competitor.
2) Wall Street (it appears) thinks that MAYBE the folks at News Corp might be GROWN UPS and run the business like a business. (Note to Errol Samuelson – You are NOT a grown up. Selling out a company that you work for in the manner you did is not a GROWN UP thing to do. Just my .02)
3) Zillow has already used the Trulia card..(in buying up THAT competitor). What will it have in response to this at the November Quarterly call?? They better show some significant signs of being profitable or the drumbeat of people exiting the stock will only get louder.
4) Finally, another factor that many may not be considering…Wall Street has been flush with printed money and the ability to be comfortable for the last few years. All eyes on the trading floor are watching Hong Kong and the uprising there. Will China crack down? Did Alibaba get valued in the market JUST in the nick of time? We do not know, but we do know that when money starts to LEAVE the market, it tends to leave the unprofitable companies first. Zillow, this means you… I am not saying Zillow will or should go away, but I do think this could mean serious belt tightening… and it could well be now that some sanity is restored to its valuation.
Those are my thoughts, I am thinking correction. What are yours?