Zillow (Z 1.74%) (ZG 1.67%) is the dominant player in online real estate search, but the company could potentially leverage its massive user base into a massive iBuying revenue stream. In this Fool Live video clip, recorded on June 2, Fool.com contributor Matt Frankel, CFP, and Chief Growth Officer Anand Chokkavelu discuss why a $30 billion market cap could be just the starting point for this leading innovator. 

Anand Chokkavelu: So, Zillow, the Amazon (AMZN -0.89%) basically of online housing. Everyone calls themselves the Amazon or whatever. I really think Zillow is that because basically, it's doing everything both first-party and third-party as they're buying their own houses and things like that. Sometimes, even inspired by this estimate or they're even making offers in some markets based on purely does estimate where you could just go and whatever yours estimate is what's you pay? That's still in the testing phase, but they buy anything housing online. They'll buy, they'll sell, mortgage loans, renting additional services like title insurance, escrow, home insurance, warranties, renovation, and moving. Those last four are potentially in the future. But it's an early leader in the space and it's pushing its advantage and at its current market cap, I think it's $30 billion last time I checked. I just get really excited. We talked about CrowdStrike (CRWD -0.23%) being $50 billion and Zillow's $30 billion. I can, part of it's my expertise nowhere near CrowdStrike. But just hey, U.S. housing market and then perhaps potentially beyond. You've got an online leader at $30 billion, yes, sign me up.

Matt Frankel: Yeah and the reason I ranked it number four as opposed to number one, I think the thing that I love the most about Zillow is also the thing that I dislike the most about Zillow. Their new focus on iBuying. The Zillow Offers segment. I think within 20 years, that is going to be how we buy and sell houses. I think the traditional real estate model will be a very niche part of the market by that point. Deidre Woollard and I were talking about this yesterday on Tuesday on The Millionacres show. Once you have it to the point where you can get like five or six offers simultaneously from the others, where it's like the Kayak of iBuying. I think you will have no need to use a traditional agent. It will make the process so much easier. But that's going to take time and profits are very elusive, to put it very nicely, in the iBuying space. I think Zillow's profit margin is like negative 7% per house on a house that they buy and sell. As they scale, they're going to really have to figure out a way to make money, and that scares me because as I've said, a great product doesn't always make a great business. I think they have the ability to win iBuying with 225 million unique users a month. I think they have the means to beat Opendoor (OPEN -1.07%), Redfin (RDFN -15.62%), Offerpad, all the others in the iBuying market if they can do it profitably. I think Zillow is easily a 10-bagger if they can do it profitably, but that's a big if at this point.

Chokkavelu: I like that because one of my fears was that they go just like with Europe bank expert, whenever there's a new thing where someone's just going crazy on lending and in an up-cycle, that's my fear with housing. That they go crazy and load up on inventory. But they've actually, even though they've been aggressive in pushing for all these changes, their actual balance sheet exposure. If I remember right, they're more than covered with cash on all their housing inventory in any loan inventory they have. That gives me comfort that as they're experimenting and figuring things out, that they're not. That even in a down cycle that no one ever predicts that they'll be fine and able to continue going.

Frankel: I mean, if they scale that operation to like 50 times its current size like they want to, then losing $10,000-$15,000 per house is a problem.