Zillow Rallying Like It’s Zoom During Pandemic Housing Boom
(Bloomberg) -- Helping people shop for homes online is a booming business in the pandemic economy.
Zillow Group Inc. reported third-quarter earnings late Thursday that beat expectations and sent shares surging. They were up 13% to $117.41 at 10:14 a.m. in New York Friday. Since hitting this year’s low in mid-March, the stock has quadrupled -- like Zoom Video Communications Inc., one of the Covid era’s breakout companies.
“The longer the pandemic goes on, the more everyone is rethinking where they live, how they live and who they live with,” Zillow Chief Executive Officer Rich Barton said in an interview. “Our conviction is rising that these are not temporal trends.”
Home sales nearly ground to a halt in the U.S. during pandemic lockdowns in the spring, causing Zillow and other housing-related stocks to crater. Since then, though, buyers have rushed back into the property market to take advantage of historically low mortgage rates and get more space to work from home.
That’s benefited Zillow, whose digital home-search tools positioned the company to benefit from the socially distanced housing boom. The Seattle-based company drew an average 236 million unique users monthly in the quarter, a record and up 21% from the year-earlier period. Revenue from Zillow’s core marketing business, which charges real estate agents to connect with visitors to its sites, rose 24% to $299 million.
The hot housing market has benefited other companies, as well. Homebuilders such as PulteGroup Inc., Toll Brothers Inc. and KB Home have seen a surge in demand, sending their stocks higher in recent months.
Redfin Corp. -- which runs a property shopping website and app, and also employs its own agents -- has surged as well, with its shares up more than four times since mid-March. The company reported earnings that beat estimates on Thursday, and said gains have been limited by its ability to hire agents to meet the extra demand.
During a conference call, CEO Glenn Kelman tempered expectations on some of the trends that have given his business a tailwind, even as he expressed confidence that the boom will continue.
“This won’t last forever, or even for another week if our society can’t keep it together for the time it takes to count all the ballots,” he said of the contentious presidential election. “But what’s most likely is that the housing market stays strong heading into 2021.”
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