Zillow Group (Z) is currently priced at $36 and change. The online real estate specialist is expanding its business model, recently acquiring Mortgage Lenders of America. Though the acquisition did not please investors, Zillow announced the deal in unison with a disappointing quarterly earnings report so it is slightly challenging to get a solid read on this stock. Below, we take a look at whether Zillow is worth your money.
The logic in acquiring Mortgage Lenders of America is to shorten and streamline the process required to purchase a home on Zillow’s online platform. Zillow executives are wisely considering the home buying process from the perspective of a consumer using the Zillow platform. The aim is to make the process as simple as possible.
Mortgage Lenders of America has been officially re-branded as Zillow Home Loans. Those who visit Zillow Home Loans online are eligible to apply for a mortgage for any house they desire as opposed to strictly those listed on Zillow Offers. Customers can also use Zillow’s current mortgage marketplace to connect with home mortgage loan lenders. Look for the home buying process to become even more streamlined in the months to come. Plenty of people will bank on the Zillow name in an effort to maximize their home’s sale price or find a property at a competitive price.
Zillow CEO and co-founder Rich Barton recently stated it would take merely three to five years for the company to scoop up 5,000 homes in a single month’s time. This jump would be quite the leap from the 500 or so homes purchased in recent quarters. Company executives insist it mortgages department headed by Zillow Home Loans will prove capable of originating in excess of 3,000 home loans each month assuming there is at least a 1/3 attach rate. The bottom line is it should not take long for Zillow to hit its stride. Look for Zillow’s platform to emerge as the go-to option for many home buyers and sellers in the months ahead. Zillow will continue to be an industry trailblazer for years to come.
Zillow has relied on machine-learning algorithms for several years. These algorithms are interwoven into each key aspect of its online real estate platform. In particular, the company’s popular Zestimate calculator is based on these complex algorithms. The Zestimate calculator is used to provide an estimated value for each property listed on the Zillow site. Zillow’s brass is so passionate about AI that it launched an AI competition a couple years ago, awarding a million dollar prize to those who could enhance the company’s algorithm. The competition resulted in a Zestimates algorithm improvement that generated results with 13% more accuracy. It is clear Zillow executives are willing to buck convention and march to the beat of their own drummer.
All in all, Zillow has nearly 160 million unique monthly web users. Zillow raked in more than $365 million in sales last quarter alone, hiking the company’s year over year quarterly sales figures about 30%. Zillow will continue to implement AI in new and creative ways in the quarters ahead. Some Wall Street analysts expect AI to generate nearly $4 trillion in business value for companies in the next three years alone. Hop on board with Zillow now and you just profit from the emerging ubiquity of AI in a highly unique way.
At the moment, Zillow is a definite buy for investors. Look for Zillow to surpass the $40 threshold at some point in 2019. Though Zillow increased nearly 20% in one month alone earlier this year, there is still plenty of room for additional growth. Investors should not be surprised if Zillow continues to trend upward throughout the remainder of the year and beyond.
Buy Zillow today and hold it for years or even decades to come. Zillow makes an excellent addition to every investor’s portfolio, regardless of risk tolerance, diversification strategy or other factors. Scoop up some Zillow shares, check the price every couple months and you will likely make money in the short-term as well as the long-term.