Consumer real estate website Zillow (NASDAQ:ZG) came out with a couple of announcements today: It will acquire New York City real estate website Street Easy for $50 million, and it has applied to sell an additional 2.5 million shares on the market.
In this video, Motley Fool financial analyst David Hanson tells investors he likes the acquisition. Zillow's business model is focused on real estate agents, and acquiring other websites allows the company to gain more consumer traffic and offer more value to the agents looking to have their properties seen.
David also says that while share dilution isn't ever something shareholders are excited to see, he thinks that after Zillow's amazing share price run-up -- more than 200% in 2013 alone -- this move definitely makes sense, taking advantage of the company's position on the market to raise a substantial amount of capital. David closes by saying that anyone interested in buying Zillow today should consider it a long-term holding and be prepared to stomach some wild volatility in the short term.
Alison Southwick has no position in any stocks mentioned. David Hanson owns shares of Zillow. The Motley Fool recommends and owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.