Zillow Shares Tumble

I’ve followed the sporadic discussions over the last year about 3rd party syndication sites and certain large and small brokerages pulling from Syndication.  Our own Sanidcor MLS has taken it upon themselves to form a public facing home search portal hoping to dominate searches for San Diego homes.

Here is an article from Bloomberg;

The company fell 6.1 percent to $28.76 at the close, after dropping 6.4 percent yesterday. The stock has declined from a five-month high of $36.60 reached Feb. 16, a day after Zillow said fourth-quarter revenue doubled from a year earlier.

Chairman Richard Barton sold 375,000 shares at $31.25 each, for a total of $11.7 million, on Feb. 21, Washington Service reported yesterday. Lloyd Frink, Zillow’s vice chairman and president, sold 510,400 shares at prices between $31.25 and $34.16 a share, or at least $16 million, from Feb. 16 to Feb. 21, according to Washington Service.

“Investors are seeing the headlines around insider sales and that’s causing some concern,” Chad Bartley, senior research analyst at Pacific Crest Securities Inc. in Portland, Oregon, said in a telephone interview. “The stock is expensive.”

The matter is further complicated with Zillow’s recent acquisition of Diverse Solutions which is an IDX provider for real estate agents.  Long a market leader and innovator of the IDX search companies, Zillow paid a boatload of money for the company.  Many have questioned the motivation of Zillow.

Lines have been drawn in the sand and there is speculation in the blogosphere about what Zillow and other 3rd party syndicators have in store for organized real estate.

A telling trend behind this discussion is a recent article on GeekWire titled Shares of Zillow Tumble shows the resolve of the original co-founders of Zillow.

Zillow had been experiencing a pretty nice run-up in its stock over the past few months, but the stock tumbled Wednesday after co-founders Rich Barton and Lloyd Frink sold off large chunks of their personal shares. Zillow dropped more than six percent in active trading after Barton sold 375,000 shares at $31.25 — bringing in $11.7 million — and Frink sold 510,400 shares over several days — netting roughly $16 million, according to Bloomberg News.

While Zillow is still trading well above the opening price of $20.00, the model is a house of cards.  I was amazed that so many investors bought into a very complex industry that is in such flux.

Mass exodus of organized real estate could return us to a time of agent/broker load and extremely unreliable data for the consumer.  One would guess the consumer’s eye would gravitate to a much more reliable date source such as Realtor.com.

Local brokerages and MLS’s cannot compete with the mature mobile search these national sites offer.

I’ve been on record with the belief that competition breeds innovation which benefits the consumer.  Most of the innovation has come to us from outside our industry.

So are the founders selling before the crash?  Or is this just bad timing, only the future will show the truth.

My guess is Zillow won’t go down without a fight!

Photo courtesy of Flickr

5 thoughts on “Zillow Shares Tumble

  1. Jeffrey Douglass

    Hi Drew, The point that I am making is this was probably not the best time for them to make that move, and certainly they must be aware of that. The people running Zillow are very smart and my hope is everyone comes to the table and stops this boycott talk. So few people really understand the issue, syndication, or how expensive it is to build a national site with all the bells and whistles. Thanks for you comment.

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