- the real estate website Zillow; and
- the U.S. energy situation.
Zillow Is Overvalued Posted at 11:44 a.m. EDT on Thursday, Aug. 29 You want power? You want strength? Take a look at Zillow ( Z), the heavily shorted real estate Web play that is soaring. The shares are up $6 on the day, and are now trading well above where the company priced its $82 secondary. Considering that the secondary was poorly received initially and broke price immediately, this is a remarkable renaissance. It's the only part of the housing-real estate sector that's doing well -- even as it is by far the most overvalued of all the stocks in the industry. By contrast, Realogy ( RLGY), which represents 26% of all transactions, is barely up today even as it put on its best face on Mad Money last night and sales continue to grow at a 17% to 19% pace. Realogy's now a plus $3 billion company and all it does is list real estate. Despite Realogy's $5 billion in sales, the company is valued at about $6 billion and is barely up this year. Zillow, with $150 million in revenues, is worth $3.7 billion and is up 240% for the year. That's just a testament to how much people love growth as Zillow could grow revenues as quickly as 60% to 70% for the year. Oh, and did I mention it has no earnings? APOL) exited Realogy at $47 and change in a gigantic secondary offering of 25 million shares. The stock's been down ever since then. But Zillow's secondary (also of insider stock) seems to have re-energized the stock after that initial decline. I think this divergence has less to do with real estate and more to do with a dearth of multiple revenue stream Internet companies. Check out Yelp ( YELP) and LinkedIn ( LNKD), two other similar business models to Zillow. They just keep running and running.
Just Being a Realist Here Posted at 11:05 a.m. EDT on Tuesday, Aug. 27 Every time you produce energy, you hurt the environment in some fashion. Any time you extract fossil fuels from the earth, you get a hazardous reaction. That's why I wasn't shocked to read still one more negative story about the hazards of fracking, and how it's causing tremors in the Eagle Ford shale as oil company after oil company discovers more and more fuel in the ground -- 600,000 barrels per day, to be precise. Now, I am not saying that earthquakes and tremors mean nothing. They need to be monitored. I am not saying, "I love fossil fuels and I think we should drill, baby, drill."