Seeking Alpha, a crowd sourced content service that provides insights for financial markets by a contributor base of investors and experts rather than sellers, recently offered content on third quarter earnings reports for Redfin and the Zillow Group.
RedfinNow,Redfin’s home flipping service, “has been maturing,” according to Seeking Alpha. As of 2018, RedfinNow has made up 9.3% of Redfin’s total revenue despite having launched this program just one year ago. Providing $80M of the company’s overall revenue of $239M, a 70% increase y/y, RedfinNow grew its revenue more than 7 X y/y to $80M. This $80M revenue represents a growth of approximately three times from its pilot year in 2017.
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Seeking Alpha indicated that by leveraging its AR (augmented reality) technology with smartphone technology, Redfin is now able to provide virtual home tours and launch its Direct Access feature that provides unguided property tours to sell housing units without agents. Direct Access reduces the average commissions paid by RedfinNow by more than $4,000/listing.
Redfin’s recent strong financial results raised the company’s full-year expectations and its strong valuation outlook, according to Seeking Alpha. The company’s nearly +46% y/y growth means that Redfin’s growth is only two percentage points slower, relative to the Zillow Group.
The Zillow Groups’s Q3 2019 earnings report indicated revenue of $745.2M, +1217.2% y/y and a net loss of $64.6M. Zillow too beat revenue expectations of $27.7M BUT that loss also beat expectations and the gap between gains and losses continues to widen for the company.
Zillow’s net loss in Q3 2019 represents a loss of more than 13,000% or -$204M compared to just $-$22M during the first nine months of 2018. Most of this loss is coming from the expansion of Zillow’s home buying segment. This segment lost $204.2M, just over the company’s overall loss of $204.15M.
Zillow’s average cost/house turns out to be $317,723 while Zillow’s average sale price is $317,610 so every time Zillow sells a house, it loses $113. During Q3 2019, Zillow purchased 2,291 houses, sold 1,211 and ended the quarter owning 2m822 houses.
Seeking Alpha is putting its money on Redfin. This content service sees a huge upside for Redfin that has yet to be realized given the strong continuation of RedfinNow and its Direct Access feature. Seeking Alpha also sees Redfin in a more competitive spot than Zillow in terms of high exposure out of the tech-driven home-buying business.
Thanks to HousingWire’s Julie Falcon and Seeking Alpha for cource data.