ZILLOW - May 5th earnings

Pardon the information dump. Short on time today, hopefully can get around to aggregating and summarizing the information later.

Credit @DakkJaniels for his previous OPEN DD.

Average home sale prices have gone down:

https://ibuyerstats.com/ info until till 12/31 2021

Number of listings have gone down:

Scatterplot of gross margins:

Zillow still has homes they need to unwind, that might need to be or have been realized in the last quarter
https://www.geekwire.com/2021/zillow-group-will-sell-2k-homes-investment-firm-winds-failed-homebuying-business/

The core business with Zillow is selling ads, with a slowdown of housing we can possibly expect a weak ER from Zillow.

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Options flow looks kinda mixed, but there seem to be large flows in sold calls. I’ll see if I can dig up other info if have time tonight.

Most Volume in November 35p is interesting. Chains with Highest OI are also bearish.

However when I zoom in on the 35p for November today, they appear to be either STO puts which would be very bullish, or just profit-taking.

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Glad to see this ticker again.
I might just be able to catch this play.

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I think Zillow is back in fair value now…


And it’s a whole lot closer to the April 2020 gap of 31-32 channel.
We might see a move there immediately–or not.

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I’d throw some caution to expecting a weak ER they are reporting Q1 which housing market was still banging. Mortgage rate hikes didn’t happen til Q2 for most part. However I’d expect guidance to be subpar and outlook for remainder of 22. They cut most of their loss inducing programs end of 21. But if they are reliant on ad revenue what we have seen from those that are heavily so heavily leveraged for that aspect in this seasons ER hasn’t been pretty.

Not sure how significant this is but I found this article. It’s published by Zillow so it may be biased, but it notes a decrease in sales growth nonetheless. So even if they are bull biased, they are still showing a decrease in home sales so actual number would be worse if anything.

6.09 million existing home sales are expected in 2022, according to our latest forecast, a 0.5% decrease from 2021.

A 0.5% decrease might not be much numerically but it could signify an end to growth in the forecast, meaning possible bearish guidance?

Also mortgage payments are going up now with the interest rate hikes. Not sure how much Zillow has priced this into their previous outlooks in terms of reducing consumer demand.

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Entered some May 6th 38p @ 1.45

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I’m in the May 6 38p as well but at 1.50.

I took 2 contracts. Ideally will cut 1 by EOD with profits and hold 1 for lotto.

Noped out of $Z puts

same I closed as well

Good summary for the upcoming housing market and Zillow earnings from zero hedge:

Zillow’s outlook indicates that soaring mortgage rates and low inventory of for-sale homes will finally slow activity.

Flat transactions would be a good year this year, and I don’t know if we’ll get there.

It’s a great way to go into a headwind,” he said. “We can go into this headwind confidently, with our eyes focused on building out the super app.

However, in an interview with Bloomberg, his takes was far less cheerful: “The market is softening, full stop,” Barton said, adding that the toughest macro lens is that inventory levels continue to plummet

So it seems like the way to navigate out of this housing meltdown is to build a super app :joy:

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On a related note, might be looking to open some OPEN puts tomorrow and swing my current Zillow positions

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Will be looking for puts at open on $OPEN. Huge beat due to their flipping business but gross profit is still negative. The earnings report states that they plan to ‘flip homes’ during tough market conditions to keep up margins. For most of the ER they were avoidant to comment on the oncoming housing conditions.

This was a nice trade and got some real steam behind it with the market tanking and 10-Yr yields rising.

Here’s an article that I found interesting. Seems when Zillow sold off their iBook business, because of the crazy bidding for homes they turned more of a profit than they thought they would. Also, they still have something like a 1,000 homes left. Seems like they might have cut the business a bit too early and had they hung on longer they could have gotten more out of it?

$OPEN puts was a HOF play imo. Following the Valhalla playbook and listening to the conference call to see through the bullshit.

Looking at headlines and seeing PM you would think it would hold up like $TREE that also reported good earnings.

Instead, it drilled hard right at open and got halted on the way down. Great job @xianchen! Wish I was in this play

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$OPEN played out but was way too hard to get a decent fill, only got one contract. Surprised $Z gapped up but still holding. Will close $OPEN soon.

Out of all positions, hopefully someone played at least :slight_smile:

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Will be looking to re enter next week