Breakout

Why Zillow could double in the next year

It’s pretty well known on Main Street, but seems to be relatively ignored by Wall Street. Zillow (Z), the largest U.S. real estate website, has reported staggering revenue growth over the past few years and operates in a space that almost everyone needs info from at one point or another, but hasn’t seen the love that other, "sexier" tech stocks saw earlier this year.

Perhaps that’s a good thing. Despite the absolute beat down of many momentum stocks earlier this month, Zillow has been more resilient, notes Joe Fahmy of Zor Capital. “Zillow held in very well, and had its biggest volume accumulation week the week ending March 21st, showing institutions are actually accumulating the stock while other momentum high growth players are getting hit.”

But it’s not just a real estate play. Zillow is “getting into mortgages,” Fahmy notes, in addition to it being a software play and mobile play. There’s also a social aspect with Zillow’s Yelp–like ratings system.

With real estate services sites like Airbnb reaching valuations of $10 billion, and Zillow around $2-3 billion, Fahmy believes there is some upside in the stock.

“I think the stock can go up 50% to 100% in the next year,” he says. “It's more diversified than people think.”

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