What Happened:
Shares of online real estate marketplace Zillow (NASDAQ:ZG) jumped 19.1% in the morning session after the company reported second quarter earnings results. Zillow blew past analysts' EPS expectations, and its revenue also outperformed Wall Street's estimates. There was broad-based strength across the company's segments, with rentals (an area of focus for investors) making encouraging strides. Zooming out, we think this was a good quarter, especially with skittishness around the health of the housing market due to higher interest rates than a few years ago.
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What is the market telling us:
Zillow's shares are very volatile and over the last year have had 19 moves greater than 5%. But moves this big are very rare even for Zillow and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 9.4% on the news that the company reported first quarter results. Its EPS missed, and the number of website/mobile app visits fell short of Wall Street's projections. Additionally, revenue guidance for next quarter was below expectations.
On the other hand, Zillow exceeded analysts' revenue and EBITDA expectations this quarter. Overall, the results could have been better.
Zillow is down 14.6% since the beginning of the year, and at $48.16 per share it is trading 17.7% below its 52-week high of $58.51 from December 2023. Investors who bought $1,000 worth of Zillow's shares 5 years ago would now be looking at an investment worth $1,148.
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