I actually agree. If the market direction is higher over the next few weeks Z likely follows along. I think getting back into short higher, or closer to EPS release may be the call for those of us who are inclined to view Z as significantly over-valued.
"While the upcoming Q1 report and related 2015 guidance for the combined Zillow/Trulia could hold some “surprises” (primarily around agent growth expectations), we continue to expect 2016 to be a breakout year for Zillow’s monetization strategy"
So, now the analysts start their back-pedaling...now we have to wait until '16 for a "breakout year", and Q1/'15 giuidance "could hold some 'surprises'"...really? That is from an uber-bull analyst...another year of Rascoff's spinning and selling.
We'll see about top line growth, but what everyone on the long side will need to support current valuation is those cost synergies from TRLA and EBITDA margin expansion that the sell side is forecasting in their EPS models. They likely will get one quarter of benefit of the doubt if TRLA integration issues muddle next report.
It makes sense if you trust their aggressive assumptions I guess. Too many known unknowns in a business model that is only now starting to mature...in a space and sector that has no real precedent. I assume I don't have to warn anyone about how analysts have various incentives to make targets appeal to their company's, bosses and clients, and therefore predict rosy scenarios that juice their targets. I think spending to get the top line growth for JMP's target assumption (30% in the next three years) will be higher than modeled and those EBITDA margins won't pan out.
"Zillow, Trulia stand to lose hundreds of thousands of listings next month"
I'm thinking, okay I am not getting all that is out there with Zillow (at least this spring/summer)...let me look at ListHub, RedFin, etc. etc.
YET - Zillow's valuation leaves no margin of safety whatsoever, and sentiment continues to languish despite the usual Rascoff tap dance.
I won't argue that Zillow won't be successful or even one day deserve it's valuation...but it has to show dynamic results going forward. Dynamic and nothing less, or huge sell off.
cognitive dissonance? They sue ListHub/News, lose those listings two months earlier than expected (height of spring selling season), and maintain they have a better platform anyway? Why the suit to begin with if they prefer their own?
Probably doesn't help that Rascoff is out there talking about how much he is like Jeff Bezos (article published yesterday and linked on the Yahoo newsfeed)....it may be a stretch to some, but I think he is dampening EPS expectations and urging patience on profitability. That may work for a company with the size and scale of AMZN, but last I looked analysts have Z really ramping up the bottom line this year and next.
Have you looked at their b/s? Assets are almost all inventory - take a haircut to that of at least 50%...now try normalizing margins and guess what they should make going forward if they hold onto their sales...it's a lot less.,...and that doesn't take into account damage to brand or litigation expense. So at $60 you are saying it should trade 20-25X estimates (old estimates...before any of this) and a huge multiple to any real tangible book value. Good luck with that.
Legal? This should be happening more often...the fact that 60 minutes is involved shows how air-tight and egregious a case this is. It's a death blow to a bunch of crooks who appear to have knowingly been putting people's health at risk for greed.
Thanks for responses. It looks like '15 guidance was a little light. The whole restaurant group has been almost parabolic last few days, and I think in the short term maybe we see a correction. I will likely cover the little I shorted into the close. gl
On p/e, peg, p/s ...you name it. Anyone know why it gets that kind of valuation?
Ownership churn after merger completed, including insiders selling as fast as they can...momentum guys moving on....valuation high-to-nosebleed for a show-me stock with competition from deep pockets just starting to heat up... lawsuit of NWS smacks of desperation, and exposes vulnerability as Zillowpro100 said...no near-term catalysts, lackluster inventory in the housing market seems especially deleterious to Zillow's business model... possible interest rate hikes and recent chatter about areas of the tech sector having bubble characteristics.
I wonder if there will be a step up in the attacks on Zillow in the WSJ and Barron's? Meantime, Zillow's promised land of them growing into their valuation gets farther away as an attrition war with NWS is costly for both companies, and I doubt has been factored into most market participant's expectations.
Still short (cost basis $118, after covering some a few months ago for a decent profit). As always insiders dumping their options as soon as they vest, disappointing bottom line eps, competition from News Corp starting to heat up ( Z suing and higher projected ad spend than most predicted), valuation approaching the levels of cyber-security in an industry that has anemic fundamentals. Still, mo players are back and it looks like there aren't many downside catalysts, so I have to keep my short relatively small, and be patient.
Generally speaking is (short-term, anyway) TA as accurate when the stock in question is going through a significant change in shares outstanding, expansion of float, ownership churn and possible lock-up changes associated with the completion of a substantial merger?
Sure, but price at 2/18/15 = $2.20, compared to price on 2/18/14 = $8.30.
I can't read your link, but earlier somewhere I saw Oppenheimer's note, and it implied or outright stated that Z's top line beat was due to higher than expected mortgage originations, by which I assume it gets a referral fee from the lenders...all well and good I guess, but why are people paying such hefty multiples for that sort of business?