Zillow Group Inc. blew away its earnings forecasts for the first quarter on Thursday, but reflected disappointing forecasts and pushed stocks down in after-hours trading, reflecting the uncertain future of the real estate industry.
Earnings for the first quarter were $ 4.26 billion, up from $ 1.22 billion a year ago to $ 16 million, or 6 cents per share. After adjusting for impacts such as stock-based compensation and restructuring costs, the company reported profits of 44 to 49 cents in the year-ago quarter. According to FactSet, analysts expect an average adjusted earnings of 24 cents per share for $ 3.36 billion in sales.
“The forecasts are very different, but there is one thing that is clear about the 2022 housing.
Zillow executives wrote in a letter to shareholders Thursday: “Inventory levels remain low, new sales lists continue to decline year-over-year, and average page views per list were record highs in the first quarter, indicating a continuing supply-demand imbalance. I am. “
Zillow has been trying to unload the homes it bought last year with a lot of activity, which has led to a surge in revenue in recent months, eventually shutting down the iBuying business and dismissing staff. Executives wrote to shareholders that in the first quarter Zillow sold 8,981 units, bought 231 units, the company owns 1,300 units, and all but about 100 units were agreed to close. Said.
“As of January 31, 2022, we are no longer acquiring homes,” executives wrote to shareholders, expecting sales of the remaining inventory to be “substantially complete” this quarter. He added that he was.
The problem for investors is the unknown on the other side of the iBuyer business rewind. Zillow executives led second-quarter revenue from $ 903 million to $ 1.03 billion. This is well below the analyst’s average estimate of $ 1.83 billion.
After closing the iBuyer business, Zillow executives will focus on consolidating assets from two segments of the Internet, media, technology, IMT, and mortgage businesses into a mobile app that can help buyers and sellers. It says that. Navigate through the entire home buying and selling process. First-quarter revenue in the IMT segment increased 10% to $ 490 million, comparable to analysts’ average estimate of $ 490 million, and mortgage revenue was $ 46 million, compared to the previous year. It fell from $ 68 million to below the analyst’s average estimate of $ 47 million.
However, the forecasts for these two segments were much lower than the analysts’ forecasts. Zillow executives forecast second-quarter IMT revenue from $ 472 million to $ 492 million, while analysts averaged $ 523 million and mortgage revenue from $ 31 million. At $ 39 million, it was below the average analyst revenue of $ 50 million.
Zillow’s share price fell 9.9% on a stormy day on Wall Street, closing at $ 39.78, and then fell more than 8% in after-hours trading following the results. Stocks have lost almost two-thirds of their value over the past year, dropping 65% as the S & P 500 Index.
In the meantime, it increased by 3.2%.
The pessimism about the residential real estate market is Federal Reserve rate hike sends mortgage rates To an invisible level since the Great Recession was forced to cut significantly more than 10 years ago. Pending home sales declined for the fifth straight month amid rising interest ratesAnd more Americans I now believe it’s a worse time to buy a home than at any other time, at least since 1978.According to Gallup.
The rating of online real estate companies was already questioned after Zillow has dropped dramatically from the iBuyer business Last year and Redfin Corp.
Significant Fourth Quarter Losses Reported.. These questions are getting bigger and bigger due to the pesky dynamics of the housing industry.
“We continue to be constructive in the disruption of residential real estate technology and see key disruptive technologies as future leaders in the industry, but in the short term, this group is in an environment of such growth. It’s hard to understand why it works. Wedbush analyst Ygal Arounian wrote in a note on Monday: “Investor sentiment is virtually bearish, at least this quarter, and perhaps in the future. Downward revisions may be seen in the quarter as well. “
Arounian maintained the “outperform” rating of Zillow, Redfin, and iBuyer Opendoor Technologies Inc.
However, it lost estimates of future quarterly financial performance and price targets for all three stocks. He believes there may be broader changes in sentiment in the future sector.
“We believe these stocks will function again over time, but for long-term investors, we can consider these strong entry points, but in the short term, they will change investor sentiment. No such catalyst is found. Reassessment in this sector. “
The uncertain nature of the real estate market and its intended “turmoil” was demonstrated in response to each quarterly financial report on Thursday.Open Door share surged about 14% in subsequent off-hours actions iBuyer reports GAAP net income for the first time It exceeds expectations of revenue by nearly $ 1 billion. Redfin’s share has since increased by about 1.5% The company easily exceeded its first-quarter earnings and earnings expectations.However, that prediction was slightly lacking.