Zillow Inc (Z) Short Case From Citron ResearchVW Staff
Citron Research out with a new short report on Zillow Inc (NASDAQ:Z) which can be found below.
The stock market is a funny place; sometimes you can be right and wrong at the same time. Over the past two years, Citron Research has been critical of Zillow Inc (NASDAQ:Z)’s business model. Zillow's financial performance has repeatedly proven us right — generating topline and bottom line misses and downward revisions. Yet the stock price has proven us wrong: 40 to 140 in 18 months!
Structural flaws in Zillow's business model
Citron could write 100 pages on the irreconcilable structural flaws in Zillow Inc (NASDAQ:Z)’s business model- past, present, and future, which are directly responsible for the earnings disappointments. But the company just delivered the message on a silver platter in one simple press release:
This week's release said it all. When we read about the partnership between Zillow Inc (NASDAQ:Z) and Douglas Elliman, the largest name in New York City real estate, a release that discloses no financial details, we couldn’t believe our eyes. Did Zillow just give away the keys to its most potentially lucrative market in the entire United States … for free?
The press release says Douglas Elliman is Zillow Inc (NASDAQ:Z)’s marketing partner. Elliman shouldn’t be Zillow’s marketing partner- they should be Zillow's customer… Not just any customer, one of its largest customers!
So much for the mythical metric “eyeballs” on Real Estate listings … or 2018 EBIDTA … or any other nonsense metric Wall Street is hooked on besides profitability. All you need to know is this:
Zillow Inc (NASDAQ:Z) gives Douglas Elliman featured listing status
Starting this week Zillow Inc (NASDAQ:Z) has just given Douglas Elliman featured listing status for its 9,000 listings, anointing its agents with the special branding opportunity normally reserved for its highest paying Real Estate Agent / customers.
With this agreement, all Elliman property listings now appear as “featured listings”, displayed on top of all Zillow Inc (NASDAQ:Z)'s search results in NY City. The Zillow website and app will become a default advertisement for Douglas Elliman. And specifically, with the “featured listing” designation for all those listings, they become unavailable as inventory for display ad sales for other brokers, thereby basically giving away the most valuable piece of inventory they own.