Dillian: Zillow Is on Fire

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I've owned Zillow (Z) for about the last six months, and I've been putting up with multi-standard-deviation moves even as the price ultimately came out basically unchanged over that period -- until the last two trading days. The stock has now decisively broken out from a very long consolidation, and everyone is following it higher. What is the story?

Well, the big-picture story is that Zillow has microscopic market capitalization of $3 billion, which is incredible when you consider that it is the biggest, most popular and soon-to-be profitable real estate portal. Compare that with King.com, which set the valuation of its upcoming initial public offeringas high as some $7 billion -- or WhatsApp, which Facebook (FB) agreed to buy for $19 billion -- and you get an idea of just how valuable an Internet property like Zillow could be.

I don't have to spend a lot of time going over what Zillow does, because everyone loves window-shopping for houses, and Zillow is the best place to do it. You can read up on the background on the Zestimate, Zillow's pricing algorithm for houses, and on its relationship with the real estate industry, which is very testy indeed. On Monday, Zillow was sued by Move (MOVE)-owned Realtor.com and the National Association of Realtors for poaching two of their top employees. But that's all out there on the Internet if you want to find out more.

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