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TheStreet Open House

Is Zillow About to Tank Like Other High-Beta Stocks?

NEW YORK (TheStreet) -- After the close Wednesday, real estate information company Zillow (Z) will report its latest results.

Zillow is expected to post a loss. In a market environment where companies hitting profit marks are experiencing large stock price slides, the prospects for Zillow do not look good.

Current analyst estimates call for Zillow to report a loss per share of 8 cents vs. earnings per share of 1 cent posted in the year-ago report. Sales are expected to grow to $63.2 million, for a 62% growth rate. That sounds great, but it's the lowest quarterly growth rate since the company went public.

A look at the Zillow chart shows serious downside risk to the 200-day moving average, currently at $85.70. Zillow saw this area a mere week ago when the stock fell from $102.50 to $86.87 in one trading session.

Price drops of $15 to $20 occur with regularity for Zillow stock, and today's earnings report is likely to kick off the latest drop. A break below $85 puts the next support zone for Zillow at $70 to $77. A breakout would occur on a move above $111.35, an unlikely scenario in today's market environment.

With high-beta growth stocks seeing their shares hammered in recent weeks, Zillow has seen its stock price trade to new all-time highs.

Today's report may finally take the shine off this bloated tech stock if the action in other high-flying stocks such as Twitter (TWTR) or Zulily (ZU) have proven in recent days. In Tuesday's earnings report Zulily beat and raised its guidance for the year -- yet the stock shed 17%.

Tomorrow may see Zillow finally join the recent tank party seen in many other over-valued stocks.

>>Read More: Surviving Whole Foods In a Walmart World

>>Read More: Jim Cramer: Alibaba Is an Unstoppable Freight Train

>>Read More: Tesla and the Curious Case of Elon Musk

At the time of publication, the author owned Twitter but held no positions in any of the other stocks mentioned.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

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