Will Zillow’s SEC Scare Actually Hurt?

Zillow (NASDAQ:Z) is taking flak from the Securities and Exchange Commission over its accounting methodology. The SEC is questioning why total marketplace revenue growth looks like it is slowing while “Premier Agent” subscription revenues are growing. Zillow did not report the increase in the average price paid for Premier Agent subscriptions in its most recent report.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Mark May, an analyst at Barclays Capital, said that “The additional datapoints requested by the SEC were similar to those provided by Trulia in its recent IPO documents and we expect Zillow will likely expand its disclosures in response to the SEC’s requests.” A Zillow spokeswoman said that the SEC letter “was in response to an early 2012 10-K filing submitted by Zillow and we have since responded to the SEC’s satisfaction.”

Trulia (NYSE:TRLA) is a competing real-estate website that had its IPO on September 20, and has fallen 12.67 percent through October 1. The company opened with a valuation of about $580 million, entering a field with fickle success rates. Zillow’s market cap is currently about twice Realtor.com (NASDAQ:MOVE) and Market Leader (NASDAQ:LEDR) combined — remember them? Trulia compares more closely with the latter.

Don’t Miss: Here’s How Big Corporations Are Quietly Cashing In On Food Stamps.