1-Star Stocks Poised to Plunge: Zillow?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online real estate marketplace operator Zillow (Nasdaq: Z  ) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Zillow's business and see what CAPS investors are saying about the stock right now.

Zillow facts

Headquarters (founded) Seattle (2004)
Market Cap $1.1 billion
Industry Internet software and services
Trailing-12-Month Revenue $66.1 million
Management Co-Founder/Chairman Richard Barton
CEO Spencer Rascoff
Trailing-12-Month Return on Equity 1.9%
Cash/Debt $76.9 million / $0
Competitors HomeGain.com
Market Leader
Zaio

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 71% of the 216 members who have rated Zillow believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star LoveMeSomeGreen, offered some insight into the bear case:

Epically poor customer service will get you absolutely nowhere in the long-run, both in valuation-sense and business-sense. It's nearly impossible to get someone on the phone @ this company. They may be the "hot" item in online Real Estate today, but they have ZERO moat around their services. It's just a matter of time before some other website offering the exact same service w/ higher overall quality and customer service becomes the next hot ticket and Zillow will become an afterthought. Full disclosure, I'm a real estate agent, and I consistently have problems with these people, typically it takes days instead of minutes to deal w/ small problems and I've never had anything but a totally infuriating experience.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.


Read/Post Comments (4) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 09, 2012, at 5:56 PM, RussHatfield wrote:

    @LoveMeSomeGreen:

    Russ from Zillow Customer Care here. We’re very sorry that you’ve had a hard time getting in touch with us and, apparently, not a great experience when you have managed to do so. Although we’re confident this isn’t the norm, it certainly isn’t something we want happening no matter how infrequently. Would you please contact me directly at russh at zillow dot com and I’ll make sure we get you back in business ASAP. Thank you!

  • Report this Comment On April 11, 2012, at 4:14 PM, GordonsGecko wrote:

    Poised to plunge? Exactly how are you coming to that conclusion?

    This isn't an article as much as it is one person's fuming opinion about Zillow customer service.

    It is yet another example of the Fool's endless and tired tactic of putting out attention grabbing headlines...only to really say absolutely nothing in the "article". Then they try to sell you on their "free" report and of course the not-so-free service that they hope you buy afterwards.

    I'm all for advertising, but don't disguise advertising with this thinly veiled "article".

    Shame on you, Fool. Shame on you.

  • Report this Comment On April 11, 2012, at 4:33 PM, sailrmac wrote:

    Funny, the quote, about the only thing in this "article" actually makes you want to buy not sell zillow. For the real estate agent to be that infuriated with customer service, it must really matter what's listed on zillow.

  • Report this Comment On May 02, 2012, at 12:05 AM, GoNuke wrote:

    May 1 2012: Zillow is an MF Rule Breaker best buy now. I, too, am sick of MF articles. I have stopped subscribing to them and seldom read them even when they are about stocks I have an interest in. There may be some intelligence in some of them but I don't have time to look.

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