Zillow 4th Quarter results no more than smoke and mirrors
So let's summarize the key points reported:-
* Earnings down 33.3% from 3 cents to 2 cents
* Revenue increases by 73% year over year
* Expenses increase by 78% year over year - so basically buying revenue with margin dilution
* No disclosure of RentJuice, Mortech and Hotpads performance - impact on Z organic growth?
Interesting how CEO Rascoff and CFO Cohen refused to answer any questions on the number of unique users added by the acquisitions. Leads to the conclusion that either acquisitions performed badly and Zillow massively overpaid and too embarrassed to disclose performance OR, Zillow growth slowed substantially and was bailed out by acquisitions. By refusing to answer these questions one has to assume the worse that Zillow organic growth was disappointing. If it wasn't then there is a massive impairment charge in a few years to write off the $54.2M Goodwill paid for the Acquisitions
I can't believe that the stock price has increased with such poor results and as The Street states "we find that the growth in the company's net income has been quite unimpressive". One can only laugh at desperate propaganda with the launch of Zillow "Dogs" a few days before the results to deflect attention from poor performance. I laughed even more that they stated 'patent pending Zillow Dogs estimating tool' when their existing zestimate is so fundamentally flawed and total garbage. What next? a patent on an algorithm to decide what color to paint the walls? or more likely, a patent on cyber bullying techniques in how a Nasdaq listed company imposes nonsense valuations on private property and refuses all reasonable requests from the property owner to correct or delete the erroneous zestimate.
So with very disappointing January Unique User numbers of 46 million including the very expensive acquisition of Rent Juice, Mortech, Hotpads, Postlets, Diverse Solutions, Buyfolio, as well as Zillow and Zillow Mobile,one has to question if Zillow has lost its way. The refusal by the CEO and CFO to provide Analysts with comparative figures on a like by like basis last month on the Conference Call, raises the question of either poor organic growth of Zillows core business , or that the acquisitions are not performing the way they were expected to when paying substantial premiums and adding $54M to Goodwill on the Balance Sheet.
No doubt Australian firm Caledonia Investments who now own 16% of Zillow will be asking serious questions at this months Investors Conference as to what the heck is going on at Zillow, and maybe even nominate a Crocodile Dundee 'character' to the Board to protect their interests. Let's hope so.
Based on a low ball forward looking statement in early November that caused Z stock price to fall 18%. When a company has a PE ratio of 250 based on supposed growth attributes the 4th quarter financials are disastrous. Do you disagree with the summary posted in the initial post of this thread? They are facts and putting lipstick on this pig doesn't make it look any better, no matter how much you want it to.
The acquisitions weren't significantly material for 4th quarter, clicks or revenue wise. If you listen to the conference call these weren't purchased as much for revenue generation as for functionality attributes. My friend, I dare you to short the stock, with still 6M shares short you are going to get squeezed next week. Zillow isn't the most loved company, but it's the most popular and well known of the online real estate search companies. They have a brand name and it's only going to grow as the economy picks up. What's your position? I've got the March 50 calls.
Absolutely no position. I am a Zillow cynic who has a fundamental issue with how Zillow imposes garbage zestimates on private property and refuses all reasonable requests to correct or delete their nonsense. No company that treats consumers with such contempt will be successful long term and that is a reason itself for investors to be concerned. The brand name is contaminated and will continue to be so as long as Zillow behaves in such a dictatorial manner.