CSGP/Z/ZG/EXPI/HOUS/RDN: PUTTING RESIDENTIAL REAL ESTATE SERVICES TO THE "BEZOS TEST"

Assessing the winners and losers following the NAR settlement as we ask how Zillow or CoStar can win. Putting residential real estate services to the "Bezos Test" as we try to identify what changes and more importantly what...

EXPI/HOUS/RDFN/RMAX/Z/ZG/CSGP/DOUG/COMP: Winners and Losers From the Proposed NAR Settlement; 10 Things That WILL...

Last Friday was a rough trading day in the residential real estate services space for ardent supporters of the efficient market hypothesis. After all, the original case against the National...

Z/ZG: Bob Seger and the Yield Curve – When the Cyclical Is Confused as the Secular

“And I guess I lost my way There were oh so many roads I was living to run and running to live Never worried about paying or even how much I owed” Seger, Bob. “Against the Wind”. Against the Wind....

Z/ZG: How Do You Spell Valuation Compression? “I-N-V-E-N-T-O-R-Y V-A-L-U-A-T-I-O-N A-D-J-U-S-T-M-E-N-T”; Other Key...

“And I just wanted to talk about my attitude or our attitude toward iBuying. As we tried to make clear over the past 6 months, the demand is real and it's very strong. So we are quite...

Z/ZG: Set an Insanely Low Bar, Step Over It, Celebrate… Really Though, In the Context of a 4-5 Year “Scorched...

“Look, look, you don't have to be any good. I mean all you have to do is have someone less good along with you. That's the whole theory behind fishing” Murdock, Dwight...

Z/ZG: Things You Didn’t Hear on the Conf. Call – The iBuyer Biz as “Table Stakes”, the Keller Williams Threat,...

“I still think that the target model that we've laid out, dating all the way back to the IPO, and again, at the Investor Day a couple of weeks ago, is the right margin framework for the...

Z/ZG: Who Could Have Predicted…. The Treacherous Transition from Quantity to Quality Crushes Another Lead Generation...

In our note following Zillow’s 2Q18 results we wrote the following about the changes to how leads are delivered for the company’s Premier Agent advertising program (subsequently dubbed PA...

The Tipping Point Has Been Reached - Introducing a New Pair Trade Long RDFN/Short RLGY, Update to our Zillow Short...

Z/ZG: A Closer Look at the Homes Division - Is Profitability Really the Goal? Not When You Sell Homes at a 3-4% Premium...

“At this point, we're clearly bias towards scale over profitability, but because we've been selling the houses so much faster than we anticipated, the return on equity has been better...

Z/ZG: There Must Be a Pony in There Somewhere, An Ode to Zillow’s “Napkin Math” as the Company Attempts to Evolve...

“Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. 'What do you think you're doing?' the...

Z/ZG: Where’s George Carlin When You Need Him? New York State Allegedly Says No to the Premier Agent Program for...

“About this time, someone is telling you to get on the plane. "Get on the plane. Get on the plane." I say….. I'm getting IN the plane! IN the plane! Let Evil Knievel get ON...

Z/ZG: What Did Zillow Really Announce? The Company’s Decision To Start Buying Homes Isn’t the Most Important...

With management’s usual flair for the dramatic and acute sense of self-importance, Zillow announced yesterday that it plans to buy and sell homes on the open market through expansion of the...

Z/ZG: Listen to Management Carefully and You’ll Hear All You Need to Know About the Structural, Secular, and...

“Somethin' ain't right. Gonna get myself, I'm gonna get myself Gonna get myself connected I ain't gonna go blind For the light which is reflected I see through...

Z/ZG: Our Confidence in Our Short Thesis Continues to Grow

Even through the prism of what some might argue are “jade colored glasses”, we cannot find enormous fault with Zillow’s 3Q17 earnings results and 4Q17 outlook.  The company delivered a modest topline beat largely due to better than...

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

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

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

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...

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

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...

Z/ZG: Define Small

“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....

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

“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...

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

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...

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

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...

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

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...

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

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...

Z/ZG: Myth vs. Reality

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...

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

“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...

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

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...

Z/ZG: It’s Strange

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...

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

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...

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

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...

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

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...