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Is Zillow the Amazon of Real Estate?

By Eric Cuka - Jul 15, 2021 at 2:23PM

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The U.S. real estate market has an estimated $1.9 trillion annual total addressable market. Should you buy this high-growth mid-cap stock now?

Today, I cover Zillow Group (ZG -1.77%) (Z -2.07%), which many consider the best of breed housing technology company. Zillow competes against businesses such as Redfin (RDFN 6.31%) and Opendoor Technologies (OPEN -5.49%). Is Zillow the Amazon (AMZN 1.12%) of real estate?

The company's solution is called Zillow 2.0, and its goal is to "create a radically simpler real estate transaction through technology, service and integration." Today's consumers want information at their fingertips, and they demand streamlined shopping experiences that leverage technology. The world has evolved tremendously over the past decade, and expectations are constantly increasing. Today's business environment is all about speed and convenience, and consumers leverage technology from companies such as Netflix (NFLX -1.37%)Uber (UBER -0.34%), Lyft (LYFT 0.26%), GrubHub (JTKWY 2.79%), DoorDash (DASH -5.39%), Expedia (EXPE 3.53%), Airbnb (ABNB -1.48%), Carvana (CVNA 7.04%), and others to enable these experiences. 

Housing is the next logical step in the value chain, and Zillow is an early leader in this disruptive technology space. In Q1 2021, Zillow reported $1.22 billion in revenue, and it was able to beat initial guidance in all segments. Perhaps most impressive, Zillow Group reported an astonishing 169% year-over-year growth in its mortgage segment. This could certainly be a risk for banks and companies such as Rocket Companies (RKT 5.35%). One of Zillow's risks is its iBuying segment. Zillow purchased 1,856 homes and sold 1,965 homes in Q1 2021.

I discuss this in more detail and provide my opinions in the video below. I also discuss the stock price and whether I think the stock is a buy now. 

*Stock prices used in the below video were during the trading day of July 15, 2021. The video was published on July 15, 2021.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Eric Cuka owns shares of Airbnb, Inc., Amazon, Opendoor Technologies Inc., and Zillow Group (A shares). The Motley Fool owns shares of and recommends Airbnb, Inc., Amazon, Carvana Co., Netflix, Opendoor Technologies Inc., Redfin, Zillow Group (A shares), and Zillow Group (C shares). The Motley Fool recommends Just Eat N.V. and Uber Technologies and recommends the following options: long January 2022 $1,920 calls on Amazon, short August 2021 $65 puts on Redfin, and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policyEric is an affiliate of The Motley Fool and may be compensated for promoting its services. If you choose to subscribe through his link, he will earn some extra money that supports his channel. His opinions remain his own and are unaffected by The Motley Fool.

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Stocks Mentioned

Zillow Group, Inc. Stock Quote
Zillow Group, Inc.
$38.36 (-1.77%) $0.69
Netflix, Inc. Stock Quote
Netflix, Inc.
$245.69 (-1.37%) $-3.42, Inc. Stock Quote, Inc.
$144.78 (1.12%) $1.60
Expedia, Inc. Stock Quote
Expedia, Inc.
$117.16 (3.53%) $3.99
Uber Technologies, Inc. Stock Quote
Uber Technologies, Inc.
$32.38 (-0.34%) $0.11
Zillow Group, Inc. Stock Quote
Zillow Group, Inc.
$38.25 (-2.07%) $0.81
Carvana Stock Quote
$54.59 (7.04%) $3.59
Redfin Corporation Stock Quote
Redfin Corporation
$12.64 (6.31%) $0.75
Lyft, Inc. Stock Quote
Lyft, Inc.
$19.34 (0.26%) $0.05
Just Eat N.V. Stock Quote
Just Eat N.V.
$3.68 (2.79%) $0.10
Rocket Companies, Inc. Stock Quote
Rocket Companies, Inc.
$11.22 (5.35%) $0.57
Airbnb, Inc. Stock Quote
Airbnb, Inc.
$124.18 (-1.48%) $-1.86
DoorDash, Inc. Stock Quote
DoorDash, Inc.
$73.57 (-5.39%) $-4.19
Opendoor Technologies Inc. Stock Quote
Opendoor Technologies Inc.
$5.68 (-5.49%) $0.33

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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