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.
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
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?
