Why Zillow Shares Zoomed

Is this meaningful? Or just another movement?

Brian D. Pacampara, CFA
Brian D. Pacampara, CFA
Feb 14, 2013 at 2:28PM
Technology and Telecom

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of real estate website operator Zillow (NASDAQ:ZG) popped 12% today after its quarterly results and guidance topped Wall Street expectations.

So what: Zillow's fourth-quarter results -- EPS of $0.02 on a 72% surge in revenue -- and current-quarter guidance were so impressive that analysts have no choice but to raise their price targets yet again. In fact, the number of unique users on its site spiked 47% year over year to 34.5 million in the quarter, confirming bullish speculation that the rebounding housing market is helping boost traffic.

Now what: Management now sees first-quarter revenue of $36 million-$37 million, ahead of Wall Street's estimate of $34 million. "We're looking forward to 2013 as we focus on three core priorities: attracting more users with great products and services; growing our Premier Agent business with unmatched value and tools; and accelerating our emerging mortgage, rental and home improvement marketplaces," said CEO Spencer Rascoff in a statement. Of course, with the stock now up a whopping 85% over the past three months alone and trading at a price-to-sales ratio of 13, there isn't much room for error.

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