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Z: Five Questions We’re Thinking about This Week, Including: Do Internet Leads in Real Estate Convert at Less than 1%?

March 23rd, 2015

2015 is shaping up to be an incredibly challenging year for Zillow.  The ground is shifting rapidly in the residential real estate space as legacy brokerage firms and media companies (think News...

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Z: Trulia 10-K Observations – Rapid Deceleration in Growth Is the Headline

March 2nd, 2015

This morning Trulia filed its 2014 10-K.  As you might remember, on the conference call discussing Zillow’s 4Q14 earnings and the closing of the acquisition management was unwilling to provide much detail on Trulia’s 4Q14 financial...

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Z: Pricing Looks to be the Lever of Last Resort; Plenty of Potential Negative Catalysts on the Horizon

February 18th, 2015

As long time followers of PAA Research know, we have a fair amount of experience dealing with heavily shorted stocks.  This is not our first rodeo with a stock that experiences a vicious rally that seems to have been...

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TRLA: Closing Out TRLA Short Idea with (-62.3%) Loss, 0.1% Alpha Generation, Z Remains Our Top Short Idea

February 17th, 2015

We are closing out our TRLA short idea with a (-62.3%) loss following the company's acquisition by Zillow.  Many, if not most elements of our short thesis on TRLA did indeed play out: in almost every way the...

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CSGP: Throwing the Marketing Gauntlet Down in Rentals Could Have Negative Implications for Everyone, Including CSGP and...

February 17th, 2015

“So hold on tight, with all your might… Cause MC's [market caps] crumble when we rumble… Cause in this battle, I’m takin no prisoners, I’m slayin MC's right on the...

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ZU: It Really Was Blue Nile Redux, Closing out ZU Short Idea with a 55.9% Gain, 64.6% Alpha Generation

February 13th, 2015

Approximately 6-months ago we introduced ZU as a short idea. At that time our thesis was as follows: Zulily’s TAM is HUGELY overstated. Bulls make the case that the markets in which Zulily participates generated...

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Z/TRLA: Beware the “tions” of 2015, Especially Those Related to Project Upstream

January 29th, 2015

“I’m wide awake. I’m wide awake. Wide awake. I’m not sleeping. Oh, no, no, no….. If I could, you know I would. If I could, I would. Let it go….” U2, “Bad”, The Unforgettable Fire In this wonderful song...

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ZU: Does ZU Have an Inventory Problem? 40,000+ SKU’s of “Ready to Ship” Items Might Be Sitting in Their...

December 11th, 2014

“We operate a minimal inventory, intermediary model where we typically take customer orders before we purchase inventory from our vendors”-          ZU S-1 filing 11/13/13Much like NILE...

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Z: You Know About the 4Q14 Outlook, Here’s What Should Concern You More – This Company is More Levered to Traffic...

November 6th, 2014

“That was a mistake….Look deep, Josh. It’s there.  It’s moves away, but it’s there.  You’ve got him….. Don’t move until you see it.” Ben Kingsley, Searching for Bobby...

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ZU: Deceleration Takes Root amidst Growing Signs of Customer Fatigue, Taking Target to $15

November 4th, 2014

Approximately two months ago we introduced ZU as a short idea.  As a reminder here’s the original elements of our short thesis:Cracks have started to emerge recently, but we think revenue, gross margin, and profitability...

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Z/CSGP: Can Rentals Save the Zillow Narrative? Don’t Count On It; CSGP Increasingly Looks Like a “Leap of...

October 31st, 2014

“…the long-term opportunity for Rentals, we look at competitors in the rental space kind of pure play what they call ILSs or Internet Listing Sites, Internet Listing Services and we see a couple...

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Z: Cuts to Featured Listings for Premier Agents Suggest Zillow’s Advertising Inventory Problems Could Be Escalating...

September 5th, 2014

Approximately two months ago we published a report backed by a review of more than 2,000 listings in 50+ markets on Zillow (“Z: Look at the Listings, the Zillow Ecosystem Might Not Be What You...

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ZU: Blue Nile Redux? Another False TAM Story with a Broken Business Model, Time to Get Short with a Price Objective of...

August 28th, 2014

“We offer consumers a very different way to shop. Its a much better experience than they get in a store environment, I will take you through that today. But, what consumers are getting is a much...

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Z: When You’re Trying to Change the Narrative Why Let the Details Get in the Way of a Good Story - The Truth about...

August 6th, 2014

Now it’s starting to make sense.  Now we understand why Zillow agreed to pay $3.5B for a company which by almost every measure is 2nd or 3rd rate in the listings aggregation space.  Now we are...

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Z/TRLA: What Is and What Might Never Be – Views from 400 Agents on Zillow, Trulia, and Housing

July 24th, 2014

We recognize that there are rumors in the market that Zillow could be in talks to acquire Trulia.  We will have more extensive comments shortly, but we wanted to provide you with some insight on what the agent community...

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Z: Look at the Listings, the Zillow Ecosystem Might Not Be What You Think It Is – the Fallacies of the Bull Case

June 30th, 2014

“You can observe a lot by watching”-          Yogi BerraAs Zillow shares climb to levels we previously never thought possible (amazingly in the absence of any material new news) we have spent...

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MCRS: Closing Out Short Idea with a Loss of (-41.3%), Alpha Generation of 5.8%

June 23rd, 2014

“Oracle is focused, focused like a laser on one goal over the next few years: becoming the number one company in Cloud computing's two most profitable segments: software-as-a-service, SaaS; and platform-as-a-service, PaaS.” · Larry...

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OPEN: Closing Out OPEN Short Idea With a (-19.7%) Loss, Alpha Generation of +48.7%

June 13th, 2014

It would be easy for us to simply dismiss PCLN’s proposed acquisition of OPEN for $103/share as an irrational bid and nothing more than another chilling sign of Internet bubble 2.0, but in no way would that approach improve our...

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MCRS and OPEN: Market Share Losses and Cannibalization of TAM Are Accelerating

May 21st, 2014

Yesterday we had the opportunity to tour the floor at the National Restaurant Association’s 2014 annual conference.  We wanted to pass along some key observations from our time in the exhibit hall.  As you might imagine given our...

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Z: Is Zillow Becoming a Pricing Story? That’s Not Necessarily a Good Thing

May 8th, 2014

Was it good enough? Time and time again that was the question we were attempting to answer in our conversations with investors after Zillow reported 1Q14 results and provided initial 2Q14 guidance yesterday.  The trading action after hours...

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OPEN: Deceleration in Cover Volume and Continued Restaurant Share Losses Pose Problems

May 2nd, 2014

In what surely has become an alarming trend for bulls on the stock, OPEN MISSED consensus revenue expectations for the fourth time in five quarters.  We cannot think of another situation where a growth company so consistently fell...

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MCRS: Three Reasons Why Investors Should Question the Quality of 3Q14 Upside – XP, Tax Rate, and Record Capitalized...

May 2nd, 2014

For the past 6-9 months we’ve been screaming from the mountain tops (or this molehill depending on your perspective) that much of MCRS’s recent revenue growth has been largely a function of...

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TRLA: What Happened Here? Where’s the Earnings Leverage? 66,700 Subs and Not Making Money…

April 29th, 2014

Make no mistake, TRLA is a stock that trades ENTIRELY off of operating metrics and relative valuation.  For now, there are enough investors willing to value the company off price/revenue multiples so long as TRLA delivers...

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Z: Eight (Reasons) Is Enough, Time to Get Short with a Price Objective of $55

April 8th, 2014

In the context of what has transpired in the broader Internet space over the past two weeks, Zillow shareholders have to be feeling pretty good about themselves, or at the very least quite fortunate.  After all, the 8-10% sell-off in Z...

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MCRS: The Investor Day Was a “Schnoozer” and That’s a Good Thing for Shorts

February 21st, 2014

Stasis is MCRS’s best asset.  That’s our grand takeaway from the company’s investor day. Otherwise, we can’t help but wonder how bulls on the stock feel about the company’s growth prospects and management team.  Those who were...

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TRLA: They Had No Choice, Now Come the Tough Questions

February 14th, 2014

Well, now we know why…. In early December, TRLA announced a convertible notes offering which was eventually upsized to $200 million.  The notes convert at $35.93/share, or roughly 2% below where TRLA shares closed yesterday.  The timing of the notes offering...

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TRLA: Share Losses Have Accelerated, How Will the Company Respond?

February 12th, 2014

It all sounds so intoxicating doesn’t it? To company management (and presumably bulls on the stock) Trulia is a leading rapidly growing mobile based residential real estate search platform integrated with a cloud based CRM system.  How many investor...

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OPEN: As Customer Acquisition Costs Sky-Rocket and Competition Gains Momentum Investors Are Left To Ask: If Not Now,...

February 7th, 2014

Approximately three months ago we postulated that OPEN’s EPS in FY14 could actually be flat on a YOY basis. At that time, and at every point up until the company’s earnings release yesterday...

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OPEN: As Opentable Loses Market Share in North America the Potential for a Minneapolis 2.0 Scenario Should Concern...

December 20th, 2013

As we approach year end it seems like a natural process for most investors to evaluate what they got right and what they were wrong about over the past 12-months.  We are no different.  While...

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OPEN: A One Legged Growth Stool Increasingly Vulnerable to Competitive Threats

November 6th, 2013

North American diners seated per restaurant is for OPEN shareholders “the one metric to rule them all” as far as stock price action is concerned.  In 2012 when diners seated per restaurant in North America slowed, OPEN shares struggled...

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EXPI

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TTC

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