Over the last 30 days, there have been three housing-related stocks that have seen their shares trail the S&P 500 by more than 10% -- and one of them has watched its stock lag the market by almost 30%.
Thanks to Ellie Mae (NYSE:ELLI) announcing disappointing earnings, Trulia (NYSE:TRLA) getting a touch too pricey, and Zillow (NASDAQ:ZG) still facing questions about its business, all three have watched their shares take a turn for the worse over the last month as mortgage activity has slowed, as shown in the chart below:
Ellie Mae, whose software and services are used by mortgage professionals, reported disappointing results after the market closed on Halloween -- and those results have certainly scared investors away from this stock. Although revenue rose by 30% over the last year, Ellie Mae's earnings were cut in half, from $0.25, to $0.12, as the company watched the cost of its revenues rise by almost 40%, and its operating expenses grow by 27%.
Ellie Mae's CEO Sig Anderman said of the quarter: "We knew this was going to be a challenging year when we adopted the strategy to build out our organization and invest for long-term growth. Despite the revenue shortfall, we are sticking to that strategy."
It's too early to tell if that strategy is working -- and although the revenue growth was impressive, the huge jump in expenses makes it hard to tell if that's investment or lack of discipline. Through the first nine months of the year, Ellie Mae's gross profit stands at $73.6 million compared to $55.3 million last year. Yet, despite the additional $18 million in gross profit, its net income has actually fallen from $15.4 million, to $11 million.
When real estate listing service Trulia reported earnings, its stock shot up 9% when the market opened the following morning -- yet it has been trending down ever since. Despite its revenue doubling, and its income moving to $7 million versus a loss of $1.7 million in the third quarter of last year, shares began to sell off as the valuation climbed a little too high.
It's also important to note that, while the company reported strong results, this was the first quarter it included Market Leader, an operating system for the real estate agents that was fully merged into Trulia on August 21 of this year after its announcement to acquire the company in May.
Unlike Trulia and Ellie Mae, Zillow has yet to report earnings; but its stock has faced the same ills as the other two, and has taken a nosedive (albeit not nearly as steep) in the last month. The stock has still faced questions following a scathing report from Citron research group in September that suggested the "stock is going to $80 ... then $50 ... then right back to where it started the year ... $30 per share."
Thanks to the less-than-optimistic reports from many about the health of the housing market and its broader recovery, many have begun to reevaluate their holdings in these tech companies that are so heavily tied to housing. Zillow will be announcing earnings on Tuesday November 5, and The Motley Fool will partner with Zillow to help cover the release.
Despite the dip over the last month, both Zillow and Trulia are still thankful for 2013, as the companies have watched their stocks climb by 185% and 140%, respectively, this year. The story is much less bright for Ellie Mae, though, as the drop over the last month has wiped out all the gains in the company, and it is now down approximately 15% on the year.
Fool contributor Patrick Morris has no position in any stocks mentioned. The Motley Fool recommends Ellie Mae and Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.