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Zillow Group, Inc. Message Board

  • agamemnus_0 agamemnus_0 May 10, 2013 4:01 PM Flag

    Amazing this didn't go under 50s yet... maybe next week?


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    • As investors begin to understand the implications of the loss of 11 cents a share in Q1 based on expenses increasing substantially higher than revenues the realization that Zillow financials are more smoke and mirrors than fact will sink in.

      Very easy to see why Zillow lost 11 cents a share compared to analysts projections of a loss of 3 cents a share. They are BUYING revenue, simple as that. Revenue increased by 70.7% compared to same quarter last year, but Expenses increased by 102.3%. Sales and Marketing expenses increased by 138.1% on a like for like basis. So it seems they have a sweatshop sales department cold calling Realtors in a desperate attempt to sign up Premier Agents. Unfortunately the incremental revenues generated didn't come close to covering the incremental costs. Anyone can grow revenue by 70% like Zillow did ,but that level of growth is a massive failure for a company with a PE ratio of 350 especially as they throw money at buying the revenue.

      Other costs are equally out of sync with revenue growth; Technology & Development costs increased by 111%, and G&A costs increased by 85%. Zillow is failing to achieve any economies of scale as it grows. It has substantial intangible assets on its balance sheet in respect of Goodwill and costs incurred that it is amortizing. Not looking good at all for future and one has to think of possibility for an impairment write off at some time.

      The final nail in the coffin is the Form 10-Q disclosure that $7.1m will ht the 2nd quarter P&L in respect of Restrictive Stock Units vesting on the departure of a fired executive. Interesting that CEO Spence Rascoff made no mention of this material fact which means Zillow starts the quarter with a loss of 21 cents a share that is impossible to recover from

28.60+0.27(+0.95%)May 27 4:00 PMEDT