Zillow Group Inc Stock Rips to Record Highs on Strong U.S. Housing Market

Zillow Group Inc Stock Soars 18% During September Sell-Off

Zillow Group Inc (NASDAQ:Z) stock has been on a tear, rising 256% year-over-year.

That momentum carried from 2019 into 2020, but was cobbled by the coronavirus-fueled sell-off in March.

Since hitting March lows, Z stock has been on a meteoric trajectory, up 419% and trading near record levels. Even during the September sell-off, Zillow Group stock surged 18%.

Big gains, but it appears even bigger gains are to come for this online real-estate firm.

Because of COVID-19, millions of people are self-isolating, which has resulted in more and more people rethinking their living situations. In addition, interest rates are expected to remain near record lows for years, and the U.S. real estate market is booming.

It’s the perfect recipe for growth for Zillow Group.

I last looked at Zillow Group in late August, which isn’t that long ago, but since then, the company’s stock has soared 25%. Over the same time frame, the S&P 500 and Nasdaq have both inched up 2.7%.

Chart courtesy of StockCharts.com

Z Stock Overview

Zillow Group Inc is the largest online real-estate platform in the U.S., with 110 million homes in its living data base. During the second quarter, it had 218 million unique monthly users and 2.5 billion visits overall. (Source: “Overview,” Zillow Group Inc, last accessed October 9, 2020.)

There’s plenty for people to see. In addition to for-sale and rental listings, Zillow Offers buys and sells homes directly in dozens of markets across the U.S. Zillow Home Loans allows its users to get pre-approved and secure financing. Zillow Closing Services pretty much does what the name implies: it helps clients close real estate transactions.

Zillow Group Inc Reports Q2 Revenue Beat

On August 6, Zillow Group announced its financial results for the second quarter ended June 30. Revenue for the second quarter jumped 28% year over year to $768.0 million. (Source: “Zillow Group Reports Second Quarter 2020 Financial Results,” Zillow Group Inc, August 6, 2020.)

Z reported a second-quarter net loss of $84.0 million, compared to a second-quarter 2019 net loss of $71.0 million.

Zillow reported consolidated adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $16.0 million, a 590% increase over the adjusted EBITDA of $2.3 million recorded in the same period last year.

The company ended the quarter with its highest cash balance in history, growing cash and investments to $3.5 billion from $2.6 million at the end of the first quarter of 2020.

“Zillow’s second quarter results are even better than we had hoped, and firm up our belief that powerful tailwinds in both real estate and technology are rapidly converging, with Zillow at the nexus,” said Zillow Group Inc co-founder and CEO, Rich Barton.

Analyst Take

Zillow was the biggest online real estate site before COVID-19, but the pandemic and work-from-home environment have further accelerated the need for the company’s online services. More broadly, with people moving their shopping habits from offline to online, buying and selling real estate online is a trend that is only going to get stronger.