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Z Stock News: 7 Reasons Why Zillow Investors Are Feeling Zesty Today

What’s going on with Zillow (NASDAQ:Z) today? Shares of Z stock are up over 10% after the company reported fourth-quarter earnings. For starters, Zillow reported revenue of $3.88 billion, which beat analyst expectations of $2.98 billion…

What’s going on with Zillow (NASDAQ:Z) today? Shares of Z stock are up over 10% after the company reported fourth-quarter earnings. For starters, Zillow reported revenue of $3.88 billion, which beat analyst expectations of $2.98 billion by a wide margin. However, investors will likely remember that Zillow had to shut down its iBuying division last year. This is because Zillow’s platform failed to accurately price and predict movements in home prices. As a result, the revenue beat is largely influenced by the liquidation of Zillow’s home inventory.

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For the quarter, this company also reported a net loss of $261.2 million, which equated to earnings per share of -$1.03. That EPS loss was worse than analyst estimates of -90 cents per share. On top of that, revenue for the entire year of 2021 came in at $8.1 billion. As mentioned earlier, this boost in revenue came from liquidation of existing inventory. Looking forward, the digital real estate platform has a 2025 revenue goal of $5 billion with a 45% adjusted profit margin.

In a letter to shareholders, management added the following:

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“We’ve made significant progress in our efforts to wind down our iBuying business — selling homes faster than we anticipated at better unit economics than we projected. The wind-down process is running smoothly and efficiently, and we expect it to generate positive cash flow. We feel even more confident today that exiting iBuying and eliminating the housing market balance sheet risk to our company and our shareholders was the right decision.”

So, what else should you know about Zillow’s Q4? Let’s jump right in.

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Z Stock: 7 Things to Know After Zillow’s Q4 Earnings

  • For Q1 2022, Zillow expects total revenue to be between $3.12 billion and $3.44 billion. Analysts were expecting $3.26 billion of revenue.
  • In the period, revenue from internet, media and technology (IMT) grew 14% year-over-year (YOY) to $483.2 million. This figure slightly beat analyst expectations of $481.9 million.
  • More than 85% of Q4 revenue came from liquidating the iBuying division. Zillow reported that it sold 8,353 homes.
  • During the quarter, Zillow lost about $25,000 on average for every home it sold, before interest expenses.
  • According to YipitData, Zillow still owns about 8,600 homes.
  • Zillow’s management spoke about building a “housing super app” during the earnings conference call. The venture seeks to invest in new products for home-sellers and double the share of U.S. home sales via Zillow.
  • “We want to acknowledge the past few months have been challenging for us all — Zillow leadership, employees, and investors,” admitted CEO Rich Barton, “But innovation is a bumpy road.”
  • On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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