The Most Important Thing Every Zillow Inc Investor Needs to Watch

As more consumers migrated to smartphones, Zillow (NASDAQ: Z  )  seamlessly made the shift to mobile and has been thriving. Is this still the most important part of the Zillow growth story?

In the following video, Motley Fool analyst Brendan Byrnes sits down with Spencer Rascoff, CEO of Zillow, to discuss the three most important things Zillow investors need to watch over the course of the next year. Rascoff believes whoever wins the consumption of real estate information on the mobile device will end up with most of the $20-30 billion in advertising revenue in and around the home.

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BRENDAN BYRNES:

And last question. For a Zillow investor watching out there — maybe three metrics that they need to keep an eye on for the next year or so coming up.

SPENCER RASCOFF:

Well, advertisers follow audiences, so audience growth, especially on mobile is critical to our future success. Other key metrics would be just mobile usage. The real estate consumer started offline by looking at newspaper classifieds to see what was for sale. A couple of years ago he moved online to look on the Internet to see what was for sale. Now he's moved onto the smartphone. And whoever wins the consumption of real estate information on the mobile device — they will end up with most of the $20-30 billion in advertising revenue in and around the home.

BRENDAN BYRNES:

Spencer Rascoff, CEO of Zillow. Thank you so much for your time.

SPENCER RASCOFF:

Thank you.

Editor's Note: A previous version of this transcript incorrectly stated that the advertising revenue in this market is $20-30 million. The Fool regrets the error.


Read/Post Comments (7) | Recommend This Article (4)

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  • Report this Comment On May 27, 2014, at 10:34 AM, BenGrahamIII wrote:

    "Rascoff believes whoever wins the consumption of real estate information on the mobile device will end up with most of the $20-30 million in advertising revenue in and around the home."

    Has anyone "won" the consumption of financial information? What about the consumption of travel information? I could go on, but I think this idea that Zillow is going to monopolize the consumption of information is risky talk, and even if they did get 20-30 million in advertising revenue, would they suddenly be worth 4.75 billion dollars which is roughly the current asking price? Why doesn't Mr. Rascoff own any shares?

  • Report this Comment On May 27, 2014, at 10:54 AM, BenGrahamIII wrote:

    "Rascoff believes whoever wins the consumption of real estate information on the mobile device will end up with most of the $20-30 million in advertising revenue in and around the home."

    Who has "won" the consumption of financial information? What about the consumption of travel information? This talk of monopolizing the consumption of information is risky. Even if Zillow achieves 20-30 million in new ad revenue based on a good sales pitch, does that suddenly justify a 4.75 billion dollar price tag for the company? Why doesn't Mr. Rascoff own any shares? Hard hitting journalism here...

  • Report this Comment On May 27, 2014, at 3:21 PM, ahcyrus105 wrote:

    Well, to be fair, it was muffled but sounded like he (Rascoff) said "billion" with a "B", not "million" with and "M". That said, your point remains valid - for this company to justify its current stock price (or meaningful upside from here) it is all about winning a disproportionate share of marketing / ad spending that has historically been extremely fragmented. So far, it has won subscription revenue from real estate agents who view Zillow as a necessary evil. Many of these "premier agent" subscriptions are subsidized by mortgage lenders who pay these subscription fees in return for loan referrals.

    Anyway, it's hard to put a lot of faith behind a CEO who doesn't retain any shares of the company he leads. It means he either views the company as overvalued or sees his vesting stock options as a form of current compensation or both.

  • Report this Comment On May 28, 2014, at 9:53 AM, rafarules wrote:

    the motley fools attempts to pump this bubble are getting ridiculous. every market day an 'article', a piece of an interview with the CEO who is playing MF and all momentum traders for a fool. stop doing your readers a disservice and find value where there is value. this game of musical chairs will end sometime just as it did 14 years ago, just as it did 6 years ago.

  • Report this Comment On May 29, 2014, at 11:24 AM, bearsnsox wrote:

    i have no idea how its legal for a company like motley fool to OWN SHARES OF ZILLOW, then write endless articles pumping them up....they put the disclaimer at the bottom of the article, but it should be at the very top

    anyway alot of firms are pumping this bubble up and the bull market is causing that tide to raise all ships...their competitors are growing, they are desperately spending every cent they get to get their name out, aka buying revenue, i just wonder how fast it will all fall when the market turns bearish, housing cools off and their revenue growth falls below 50%...

  • Report this Comment On May 29, 2014, at 11:47 AM, bearsnsox wrote:

    the hilarious part is that the MOTLEY FOOL COMMUNITY rates zillow an abysmal 2 OUT OF 5 STARS!! and yet they assign these fake reporters to pump up the stock throughout the week

  • Report this Comment On June 02, 2014, at 8:36 AM, RedandBlack wrote:

    Dear Fools-

    It's a $20-$30B market, not million $. Please correct.

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