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Zillow, Inc. Message Board

  • eyesandears51 eyesandears51 Sep 20, 2013 2:08 PM Flag

    Zillow: Good Mid/LT Prospects, S/T Citron Research Road Kill?

    Zillow is down nearly 9% on high confirming volume, based on two factors. The most immediate impact is a negative report from research firm Citron Research questioning their business model. Citron has a history of posting negative expose's on companies. Their stocks then drop precipitously. Witness high flyer ISRG previously trading in the $ 500's before Citron Report now $ 372. Some of Citron's target recover their pricing and momentum, others like ISRG do not. The second reason is the stock was highly valued after a 22% run up since August 20.

    I like Zillow's underlying business model and competitive positioning, but sold my holdings yesterday just above $ 101 due to the valuation being stretched.

    The remainder of September also promises to be challenging for the broader market. Fights over the expiring Federal Budget, sequester, and US Debt level will be public and very messy. A 5-8% S&P correction is increasingly possible.

    In summary, I like Zillow’s Medium to Long Term prospects but believe that a combination of a high valuation, fear associated with Citron Research report, and external factors that may result in a September market correction, the risk/reward at $ 91 is not compelling. The stock is likely to test the recent support base of $ 80- $ 80.50, which provides a much better balance between risk and potential share price appreciation.

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    • The message may not be welcome but you analysis is sound and probably accurate.

      • 1 Reply to crkenmore
      • HAHAHA..... I love it.

        That citron report reminds me of a analysis by one of Zillow short position writers on seeking alpha. I love it how they call it the most comprehensive research report but fail to calculate/ predict pe ratio, revenue for 2016. They give percentage of spending but fail to disclose the revenue growth.

        I am hoping the stock goes to low- mid 80's so I can pick up some more calls for 2015.

        FYI- Citron wrote a research article in novemeber of 2012 giving a downgrade and basically SELL analyst (which happens to be the same time I bought shares of Zillow)...... Look where its at NOW.

        I love it.... Keep shorting people..... I need you to buy back at a higher price so I can make money.

 
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