- 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.