Zillow Goes Public - Ticker Z - $1.6 Billion Valuation - Thoughts?

Question

Zillow started trading today on the NASDAQ under the ticker Z. According to this article on TechCrunch, when the stock opened at $60, that represented a valuation of $1.6 billion - extremely frothy, given the $11.3 million it generated in the first quarter of 2011.

So . . . lets talk about this stock, the company, the numbers . . . what do you think? :eyes:

Does this potentially impact sites like ours?

So . . . lets talk about this stock, the company, the numbers . . . what do you think? :eyes:

Does this potentially impact sites like ours?

Ryan B. · Answer

1.6 billion valuation!!!   Is that the "zestimate", because if it is you know it is about 20% too high.   :D

Sorry, bad joke, I could not resist.

Nick J. · Answer

^^^ stole my joke

In reality, I don't care what they valuated it at simply because I'll never buy their stock, ever.......

I would be interested in learning how if what improvements they will make to their site. Knowing how to exploit it for my personal gains and profits are the only thing I'm interested in.

Jim Stardust · Answer

The valuations some of these companies are getting are simply mind boggling, you'll think we're in the internet bubble 2.

I guess Zillow can now use its stock currency to make acquisitions in this space and increase its product offerings and audience.  It's not easy to become the #1 real-estate destination in few short years but it's managed by some top industry veterans.

I'm not sure about what you mean with impact on site like this Joshua, what type of plans do you have?  I'm not trying to put you on the spot, but let's say you get approached by someone like Zillow, would you sell it now?  I've used Zillow and I found the knowledge and expertise on this site to be much more specialized, deeper, and the sense of community is much greater.  I would say you have more in common with LinkedIn than Zillow but I could be wrong.  Zillow's traffic is mainly coming from home buyers and sellers looking for answers and solutions.  I realize they have somewhat active professional community, but I don't think it's the main attracting point.

I do think the future is bright for this site, it's well managed and promoted, you are building a social "professional" community and with due time you should achieve success.  The site and this community is the the future, so it's just a matter of execution and making the right connections/moves.

Kevin Yeats · Answer

Can I short it yet?

Actually, the first question to ask is "What are their revenue and profit prospects?"

Jon Klaus · Answer

It's 1999-2000 all over again.  A very few of the new dotcoms will make it big, but most won't.  Zillow's current valuation says it will net $100mm before long.  Just how are they going to do that?

Josh, if they buy you for stock, take a page from Mark Cuban's book.  Sell as soon as your shares become unrestricted.

Jim Stardust · Answer

Zillow has a $1 billion of currency now, I wouldn't dismiss them as a single product.  They're looking at the future of real estate marketplace, I can almost bet you they'll be making acquisitions in the space to create some sort of an alternative MLS system.  That's where the money is, think eBay or Craigslist for real estate.  The company is run by top industry veterans so there's a lot of talent at the top.  I can see them acquiring FSBO or technology to build something similar.  There are companies like Trulia that would make a good fit with Zillow.  Also, the successful launch of their IPO and the interest from money managers and investors, especially if it continues, is going to give them great legitimacy so they will have a lot of leverage to deal with the power players in this field, e.g., The National Association of Realtors.  Although I think Zillow's valuation is ridiculous based on their current revenues and income, I do think they have a good chance of succeeding, think about it, this space hasn't seen the type of innovation and game changers as we've seen in other industries or media.

As I thought about Joshua's question a bit more, I think Zillow will have a positive impact on this industry and this space in general.  It gives sites like this more legitimacy and viability.  I bet you the more developed companies in this space are already talking to venture capitalists and will be dropping the "Zillow" name quite often, those VC's who may not have considered this space as viable or potentially lucrative a couple of years ago will pause and think about the next big thing.

Kiran K · Answer

Somebody lost almost half there investment in Zillow by buying at 60$. Is there a a lack of good stocks in the current market or lack of IPO's which is making people value companies like linkedin and Zillow.

Or is it just one day winner and down from there once the hype settles down.

Ben Kevan · Answer

As I posted in G+, the issues are around their platform, which is not expandable. I could see going public with a base company, that would use the money raised by Z IPO to develop / deploy other niches. But, this was a single product IPO of Zillow, and not for a parent company.

Here's what I said on G+: 
Google was profitable when they went public, they also had a better platform for expansion, which is clearly seen now.

P can't expand out much, it's a genomic based media platform.

LinkedIn can't expand much without breaking it's "professional" status.

Zillow has seen traffic sky rocket because of people looking for crazy deals, wondering if their property values are dropping, or people that consider their primary residence as their primary investment. Now as more people rent, and fewer own, this want to know "how much its worth" will go down, and when the housing market isn't one of the top news items, will it still attract the same amount today?

The difference between Google and the above is Niche and Expand-ability. We are on Google+ commenting not on Pandora+, LinkedIn+ or Zillow+ right?

I'm no Warren Buffet, but I've made some good (and bad) trading decisions in my time. I have, however, recently shifted some of that money into Real Estate (primary residence and 2 duplexes).

Here's some interesting stats of them: 
http://siteanalytics.compete.com/linkedin.com+pandora.com+zillow.com/

Joshua Dorkin · Answer

Jim - I didn't have anything specific in mind . . . just asking general questions for the moment.  
Ryan - Nice joke . . . or was it

Joshua Dorkin · Answer

Kevin - Check the TC article I linked.  I think they did $30mm last year and $11.3 in the first quarter of 2011.  Also,

The company lost $12.8 million in 2009, and lost roughly half of that ($6.7 million) in 2010. The company, which launched to the public in 2006, also revealed that as of December 31, 2010, it has an accumulated deficit of $78.7 million. In the three months ended March 31, Zillow lost $826,000.

Zillow Goes Public - Ticker Z - $1.6 Billion Valuation - Thoughts?

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