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 |
$649.6 million |
| Industry |
Internet software and services |
| Trailing-12-Month Revenue |
$36.4 million |
| Management |
Co-Founder/Chairman Richard Barton
CEO Spencer Rascoff
|
| Trailing-12-Month Operating Margin |
(12.9%) |
| Cash/Debt |
$15.6 million / $0 |
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 82.5% of the 120 members who have rated Zillow believe the stock will underperform the S&P 500 going forward. These bears include rymico and Jeffrey2012.
Late last month, rymico listed several of Zillow's negatives: "Another one of those dot-com bubble bursts. Company is not making profits, provides services easy to mimic, lower sustainability, many alternatives in the marketplace."
In fact, Zillow currently sports a lofty price-to-sales of 17.8. That represents a clear premium to other online real estate plays like China Real Estate Information (Nasdaq: CRIC ) (4.6), LoopNet (Nasdaq: LOOP ) (8.8), and Market Leader (1.9).
CAPS member Jeffrey2012 elaborates on the Zillow bear case:
The company is propped up right now by the prospects of high flying growth. However, they are not going to continue growing by up to 74% in the future. Their low base is allowing them to grow fast, but due to their reliance on the real estate industry, I find it hard to see their future being rosy.
They are also losing money and continuing to lose money due to their rapid growth and build out of their data centers and other capital equipment.
Lastly, I haven't heard much about their lawsuits being talked about, but the companies such as Lending Tree have been around way longer than Zillow has. It's quite possible they have infringed on some sort of patent. That is a big potential risk to the stock.
What do you think about Zillow, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
Interested in another easy way to track Zillow? Add it to your watchlist.
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