What happened
Real estate might currently be hot, but investors were cool to online real estate portal operator Zillow Group (Z 3.29%) (ZG 4.02%) on Monday. Both classes of the company's stock took hits, with the former declining by 7.8% on the day and the latter falling 7.1%.
So what
Zillow reported no notable proprietary news on Monday. Rather, it seems that peers and external factors are affecting sentiment on the company.
Investors are still digesting the ugly results posted by fellow real estate platform Opendoor Technologies, which reported its fourth-quarter results late Thursday. Like Zillow, Opendoor suspended homebuying when the coronavirus pandemic began to spread. Nevertheless, a steep 83% year-over-year decline in Opendoor's total homes sold (to 849) was worrying.
Image source: Getty Images.
That's a sobering number. Previously, real estate companies enjoyed tremendous popularity on the back of a housing market that has been robust throughout the pandemic.
Another factor is the broad sell-off in tech companies and other businesses associated with the stay-at-home era. Investors are moving on to titles that could capitalize on a post-pandemic recovery, and shunning titles such as Zillow that did well during the outbreak.
Now what
We should bear in mind, though, that the key factor driving the real estate market -- persistently low interest rates -- won't fade away anytime soon. So the market should remain extremely frothy, and as always, Zillow will be there to take advantage of it. Investors shouldn't lose heart with this company now.
