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Z/ZG: The Hunter Becomes the Hunted - Feedback From 380+ Real Estate Agents

August 21st, 2017

The attached powerpoint presentation summarizes our findings from our 8th annual survey of real estate agents in the United States.  

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Z/ZG: An Earnings Conference Call “For the Ages” That Reminds Us Why Zillow Has Become Our Top Short Idea; The...

August 9th, 2017

Redfin is trying to get rid of buyers' agents, and we'll see how that goes. As I said previously though, we are focused on doing something different. We are brokerage-agnostic is the way for...

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Z/ZG: Seven Causes for Concern (at least) as Zillow Management Pushes the “Narrative”

July 26th, 2017

Approximately two weeks ago, Spencer Rascoff, CEO of Zillow published a post on LinkedIn entitled: “Why Some Investors Care About Culture”.  In the post, Mr. Rascoff lauded two (unnamed) investors that are large...

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Z/ZG: Define Small

May 5th, 2017

“Mark, on the CFPB, we don't break out the amount of the revenue that comes from co-marketing efforts, but we have said and it continues to be the case that it's a small portion of overall revenue.” Kathleen Phillips, CFO Zillow, 1Q17 Earnings Conf. Call....

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Z/ZG: These Questions Need to Be Asked; It’s Time to Address the RESPA/CFPB Issue

May 4th, 2017

“Prior to and during the live conference call, investors may submit questions via Sli.do (www.slido.com).  By entering the event code #ZEarnings on the Sli.do homepage, participants will be placed into the queue where they...

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Z/ZG: Is Zillow’s Lender Co-Marketing Strategy under Increased Scrutiny from the CFPB?

March 9th, 2017

Approximately 18-months ago, we published a report entitled: “Is Zillow’s ARPA Growth Miracle Over? The Demise of the “MSA” in the Mortgage Channel Suggests It Could Be, Reducing Estimates”.  In...

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Z/ZG: Investing for Growth or the Cost of Doing Business? A Closer Look at the “Funnel” Suggests Growth for this...

February 8th, 2017

In many ways the investment case for or against Zillow increasingly can be distilled to one single question: Does the company’s current cost structure reflect investments for growth or simply...

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Z/ZG: Tick, Tick, Tick…. Time Is Running Out on the Growth of the Premier Agent Advertising Program as the Top of the...

November 2nd, 2016

Zillow management did it again. The company guided down for the forward quarter and “talked down” margin expectations for the out year. This has become a tried and true practice for...

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Z/ZG: Leads Don’t Grow to the Sky and Other Troublesome Comments from Management

August 5th, 2016

Believe it or not, there was a time even after we adopted a bearish stance on Zillow’s stock that we were allowed to ask questions on the company’s earnings conference calls.  Unfortunately we asked too many difficult...

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Z/ZG: Myth vs. Reality

July 18th, 2016

Over the past month, we surveyd approximately 470 real estate agents.  The vast majority of the agents we surveyed have at least 10-years experience, generate at least 15 transaction sides annually, and work for one of the REAL Trends 500 brokerage firms.  Additionally, a significant...

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Z/ZG: What Is Adjusted EBITDA? Zillow Continues to Hide Elevated Cash Technology Spending in Plain Sight

May 13th, 2016

“EBITDA isn’t a controlled substance or a law enforcement agency. It’s the standard abbreviation for the financial-analysis term “Earnings Before Interest, Taxes, Depreciation and...

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Z/ZG: Where’s the Operating Leverage? And Other Questions That Need to Be Asked

May 4th, 2016

The structural flaws with Zillow’s operating model are all hiding in plain sight.  It’s May 2016, nearly 5-years after Zillow went public and the company is no closer to achieving its theoretical adjusted EBITDA margin...

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Z/ZG: It’s Strange

February 12th, 2016

Things have been quite different in Internet TAM-land for the past 3-6 months.  Seemingly overnight investors have held companies in the space to a higher standard of operating metrics, profitability and cash flow (do not confuse the relative “higher” with the absolute “high”). In a shock...

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Z/ZG: Desperate Times, Desperate Measures – The Implications of Eliminating “Featured Listings” & Other Changes...

February 5th, 2016

It’s one of the more laborious, mind-numbing, and tedious exercises we have conducted on any investment idea, but it has proven to be the most revealing. Of course, we’re talking about the task...

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CSGP/Z: The Reality in Rentals - Awash in Leads as Incremental Spending Goes Towards Self-Branding Initiatives

November 23rd, 2015

Over the past few weeks, we conducted a survey of more than 50 rental property managers across the country.  Overall the feedback from our survey suggests that CSGP management's assertions about the company's...

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Z: You Asked for It, Now You’ve Got It – The Bull Case for Zillow Relies on the Company’s Ability to Become a...

November 4th, 2015

Where were you on that fateful day, July 28, 2014 when Zillow announced its intention to acquire Trulia in a purchase that was valued at $3.5B at that time? It was a brutal time for short sellers as...

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Z: Is Zillow’s ARPA Growth Miracle Over? The Demise of the “MSA” in the Mortgage Channel Suggests It Could Be,...

October 16th, 2015

“By the minute I was getting paid like a hot line, Servin' rollin' fiends was calling, we was dot com, Well connected, well respected and well protected.”-          Meek Mill/Wale....

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Z: Forget the Agent in North Dakota Spending $20K and the Growth in Agents Spending $5K/Month, Deceleration Is the Real...

August 5th, 2015

Investors love anecdotes about companies; they represent the “broth” in the mosaic theory “soup” we create on any given investment idea. Industry statistics and company specific filings...

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Z: A Sin of Omission and Other Thoughts on the CFO’s Departure

July 9th, 2015

From our perspective, within the walls of Zillow Chad Cohen has been the fourth most important person in the company’s empire building efforts over the past decade behind Spencer Rascoff, Greg Schwartz, and Richard Barton.  This is why we think...

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Z: Game Changer? The Age of Upstream Might Finally Be Upon Us As Brokers Attempt to Reassert Control over the Flow of...

May 15th, 2015

“Beware the the “tions” of 2015, Especially Those Related to Project Upstream….”-          PAA Research, 1/29/15“There’s something brewing here that really makes me think that...

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Z: Purposeful Obfuscation of Slowing Metrics and Other Key Takeaways from Zillow’s Earnings Release and Analyst Calls

May 13th, 2015

Heading into the company’s 1Q15 earnings call we thought we might get the following from Zillow: Messy 1Q15 results - check New metrics that would be impossible to reconcile with historical...

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Z: Stretching to Achieve Growth and Shrinking the TAM – Zillow’s Inventory Issues Result in New Policies that...

April 24th, 2015

For the past year, we have been arguing that Zillow has a major advertising inventory problem.  The growth of the company’s premier agent featured listing program combined with deals Zillow has...

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Z: Is It Time to Question This Management Team? Taking our Price Objective to $50

April 15th, 2015

Well that was interesting.  This is not our first rodeo in a heavily shorted battleground stock, but for some reason each experience often reveals something new about potential trading action.  Today’s action certainly underscores a...

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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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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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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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