Zillow will continue to drop as long as there are price reductions and they lose money on their shady deals. They've been lying to everyone about how the housing market is secure and going to continue to boom.
Apart from their imminent downfall for the remainder of this year, the market itself is going to crash:
If we look at the current state of the market, the Market Cap to GDP Ratio is extraordinarily high:
To be fairly valued, the market would need to drop around 60%.
Wilshire 5000 Total Market Inde (^W5000) = $45,313.82
Title: Gross Domestic Product Series ID: GDP Source: U.S. Bureau of Economic Analysis Release: Gross Domestic Product Seasonal Adjustment: Seasonally Adjusted Annual Rate Frequency: Quarterly Units: Billions of Dollars Date Range: 1947-01-01 to 2021-04-01 Last Updated: 2021-08-26 7:51 AM CDT Notes: BEA Account Code: A191RC
GDP = 22,731.369 as of 2021-04-01
(45,313.82 / 22,731.369) * 100 = 199.344879%
Even if we were being more conservative about it, (45,313.82 / 25,000.00) * 100 = 181.25528%
Zillow doesn't really have 'shady' deals. The whole real estate industry is shady. The whole industry lies because consumer sentiment is all they really have. Zillow is currently still an advertising medium. Its promise is not in real estate transactions so much, but rather in monetizing the visitor from click to close. There's far more money in mortgages than in purchases (which is why they bought Rocket Mortgages and other business along the chain).
While iBuyer is 10% of their business today it is an intriguing area of growth if they can find a way to have technology improve the hideous experience that is buying or selling a home (documents, blind bidding, appraisals, mortgages, agent commission).
No position, but I'm bullish.
aschnell001
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@sparo Fair points! Best of luck to you if you decide to take on a position with them.
While iBuyer is 10% of their business today it is an intriguing area of growth if they can find a way to have technology improve the hideous experience that is buying or selling a home (documents, blind bidding, appraisals, mortgages, agent commission).
No position, but I'm bullish.