NEW YORK (TheStreet) -- Shares of Zillow  (ZG - Get Report)  were down 6.42% to $36.82 this morning despite reporting higher than expected second quarter earnings Thursday after market close, CNBC's David Faber pointed out this morning on "Squawk on the Street."

The company did however report losses due to legal costs, Faber said.

The company's 2016 EBITDA guidance is down from analyst estimates. Revenue rose for the full year by $5 million and EBITDA for the full year by $10 million, he added.

"I think you're looking at a stock up over 100% over the last year. So it doesn't surprise me that it's taken a little breather," Zillow CEO Spencer Rascoff said on CNBC.

The company went public five years ago with a $500 million market cap and since then it has appreciated to $7 billion, Rascoff said.

Zillow is taking some of its profits and reinvesting in areas it thinks will pay off, which Rascoff calls its growth story.

The website's total number of real estate agents is declining to focus more on higher quality agents. Zillow's traffic is rising which is increasing leads to agents. It wants to make sure those customers are getting access to great agents, he explained.

Zillow is capturing 67% of mobile and web real estate audience and 78% of mobile-only real estate. The company plans to drive those numbers higher, Rascoff noted.

"That's why we have hundreds of software developers building new products and features to grow our audience," he added.

The company has told investors it expects 40% EBITDA on margins at scale to prepare investors for longer term story of higher margins. The company's near term goal is to grow revenue and audience because that is what will create more shareholder value, he noted.

Separately, TheStreet Ratings team set this stock as a "hold" with a ratings score of C. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. However, as a counter to these strengths, the ratings team finds that the company's return on equity has been disappointing.

TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. 

You can view the full analysis from the report here: ZG