Wall Street Watch Tuesday: Zillow's in the Doghouse with Advertisers
Investors are turning against the real estate information website operator after it posted a disappointing outlook for the new quarter.
Looking back, Zillow held up just fine in Monday night's earnings report. Revenue soared 67% to $31.9 million during the third quarter, just ahead of the $31.7 million that Wall Street was forecasting. Adjusted earnings clocked in at $0.07 a share, matching analyst estimates.
The former dot-com darling -- which generates 74% of its revenue from real estate brokers and other industry pros that pay premiums for targeted ads and enhanced features -- is simply not closing the sale when it comes to the quarter that started last month.
Zillow is targeting revenue of $30 million to $31 million for the holiday quarter. That may represent a healthy 51% to 56% year-over-year spike in revenue, but it's not good enough. For starters, Wall Street was calling for Zillow's top line to soar 64% during the period. Even at the high end of the range, investors are still looking for a sequential dip. Yes, real estate is a seasonal business, but analysts were still holding out for sequential improvement.
There may be a bargain here, eventually, but investors know that every stock is bought and sold on an "as is" basis.
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• Voters who haven't suffered through long lines during the early voting window and who didn't use absentee ballots will hit the polls on Tuesday. The results won't be anywhere close to ready by the end of the market trading day, but you can expect volatility as investors jockey for position.
Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. Motley Fool newsletter services have recommended buying shares of Zillow.