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Zillow (NASDAQ:Z), a free online real estate marketplace that provides information on the housing market, sold off sharply after reporting financial results for the third quarter. Earnings came inline with estimates for the period, but its outlook has investors running for the hills.
The Seattle-based company announced that total revenue surged 67 percent to $31.9 million, compared to $19.1 million in the third quarter last year. Marketplace Revenue jumped 99 percent, while Display Revenue increased 15 percent. Net income came in at $2.3 million, resulting in basic and diluted earnings per share of 8 cents and 7 cents, respectively and inline with estimates. Revenue posted a small beat as analysts were expecting revenue of about $31.7 million.
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“Zillow had another great quarter with record usage across mobile and Web. In fact, we reached a major milestone recently, topping 1 billion home views on Zillow Mobile through the first three quarters of 2012,” said Spencer Rascoff, chief executive officer of Zillow. “During the quarter we also expanded our suite of technology tools and services for professionals. Last week we announced the acquisition of Buyfolio, a collaborative shopping tool that can increase the conversion rates for agents, and further add value to our successful Premier Agent program. We’ve made another important leap today with the announcement of our planned acquisition of Mortech, which will further extend the services we provide to the mortgage industry.”
Although the numbers for the current quarter were positive, the outlook sent shares plummeting down more than 20 percent in late afternoon trading. For the fourth quarter of 2012, Zillow expects revenue to be between $30 million and $31 million, below the estimate of $32.5 million by Wall Street. For the full year of 2012, revenue is projected to be $113 million, compared to expectations of $114.5 million.
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