1-Star Stocks Poised to Plunge: Zillow?

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, online real estate marketplace operator Zillow (NAS: Z) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at Zillow's business and see what CAPS investors are saying about the stock right now.

Zillowfacts

Headquarters (founded)Seattle (2004)
Market Cap$1.1 billion
IndustryInternet software and services
Trailing-12-Month Revenue$66.1 million
ManagementCo-Founder/Chairman Richard Barton
CEO Spencer Rascoff
Trailing-12-Month Return on Equity1.9%
Cash/Debt$76.9 million / $0
CompetitorsHomeGain.com
Market Leader
Zaio

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 71% of the 216 members who have rated Zillow believe the stock will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star LoveMeSomeGreen, offered some insight into the bear case:

Epically poor customer service will get you absolutely nowhere in the long-run, both in valuation-sense and business-sense. It's nearly impossible to get someone on the phone @ this company. They may be the "hot" item in online Real Estate today, but they have ZERO moat around their services. It's just a matter of time before some other website offering the exact same service w/ higher overall quality and customer service becomes the next hot ticket and Zillow will become an afterthought. Full disclosure, I'm a real estate agent, and I consistently have problems with these people, typically it takes days instead of minutes to deal w/ small problems and I've never had anything but a totally infuriating experience.

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At the time this article was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

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