🏡 Zillow scrolling > Insta scrolling

Tuesday, February 16, 2021 by Robinhood Snacks | Disclosures

When the Zestimate is too good to be true

Last Week’s Market Moves
Dow Jones
31,458 (+1.00%)
S&P 500
3,935 (+1.23%)
14,095 (+1.78%)
$47,960 (+26.70%)

Hey Snackers,

We hope you enjoyed the long weekend, whether you were celebrating the joyous Lunar New Year (FYI: Year of the Ox), Valentine’s Day, Mardi Gras, Presidents' Day... or just this 4-day week.

Stocks closed at all-time highs last week, boosted by progress on stimulus #3 and a string of upbeat earnings. Bitcoin also hit fresh records, on support from BNY Mellon and Mastercard. Over the weekend, the Senate voted to acquit Trump, ending the impeachment trial.

1. Zillow hits a high on the scrollable House Hype, but can it become the Amazon of homes?

Lusting after the oceanside Colonial... Zillow's last quarterly earnings were as steamy as the Zillow SNL skit. Zillow is the real estate marketplace that helps you buy, sell, or rent homes. As homebound Millennials spent late nights in bed scrolling through condo listings:

  • Record traffic: Zillow’s websites and apps racked up 2.2B visits last quarter, up 27% from the previous year.
  • Sweet sales: Zillow mainly makes $$$ by charging property management companies to advertise listings and selling "Premier Agent" services, like customer leads. In 2020, it made $3.3B in sales, up 22% from 2019.
  • Record stock price: Zillow stock soared to a record last week after it dropped the numbers. Shares have nearly 4X'd over the past year.

Thank the House Hype... The Fed has given us near-zero interest rates to stimulate the economy. That led to mortgage rates notching more than a dozen record lows in 2020. Thanks to cheap loans WFH, home demand has skyrocketed. While marketing is still Zillow's main money maker, the home selling/buying segment is catching up:

  • Zillow uses its massive database on homes for iBuying — aka: making nearly instant cash offers on homes based on "Zestimates" (and cutting out the agent middleman). It charges sellers commission-like fees, and also profits on flipping homes it owns.
  • Competitors Opendoor and Redfin started iBuying before Zillow, and their stocks are also at record highs. Unlike Zillow with its ad biz, they mainly make money on listing and commission fees.
  • BTW: iBuyers accounted for just 0.2% of all US home purchases in the third quarter of 2020 — but there's room to grow as technology continues to disrupt traditional real estate.

Data at scale = power to scale... While Zillow is newer to iBuying, it has massive scale in terms of its data and traffic. Zillow has a database of 110M+ US homes out of ~139M total US homes, and 201M monthly visitors (compared to Redin's ~40M). To become the Amazon of home sales in a low-inventory, capital-intensive market, robust data is key to calculating the best prices and turning a profit.


V-Day date on the Nasdaq... So romantic. Bumble stock popped 75% from its IPO price during the dating app's first three days as a public company. It's still not profitable, but says a higher percentage of its female swipers become paying customers than the market average. But don't call it a dating app: Bumble's focused on expanding to platonic services like Bumble Bizz for career networking, and Bumble BFF for friend-swiping. If it can successfully monetize those, it could keep you even after you DTR — and potentially gain an edge over dating leader Match Group (proud parent of Tinder and Hinge).

Got me Lyfted, shifted... higher than the Hyundai Sonata ceiling. Lyft shares jumped 9% for the week, after the ride-hailer revealed its net loss for 2020 shrank from 2019. Now it's aiming to make an (adjusted) profit by the end of 2021. Uber also reported a smaller annual loss thanks to Eats, which is bringing in more $$$ than rides — delivery bookings last quarter more than doubled from 2019. While rides are (slowly) recovering, Uber has an advantage over rides-focused Lyft.


Quick comedown... Weed stocks soared at the beginning of last week on some canna-good news. First, Canopy said it expects to be profitable within a year (despite a big quarterly loss). Then, Tilray landed a deal to distribute its medical marijuana in the UK — shares doubled in value from Monday to Wednesday. Reddit traders may have boosted the buying, potentially bullish on the possibility of federal marijuana decriminalization in the US. But the canna-rally quickly relented, and Tilray shares plunged a record 50% on Thursday. Canopy and Aurora also tumbled, closing lower for the week.

Chip-outta-luck.... Try Pringles? Automakers are hungry for chips to stick in their cars. ICYMI: GM and Ford had to shut down plants this year because of a global chip shortage. Last week, GM said it expects lost production from the shortage to slash 2021 profit by $1.5B to $2B (Ford projects a similar L). GM shares dipped for the week, despite strong quarterly earnings and an upbeat profit outlook for 2021. Lucky for them, the White House is working to address the shortage. Expect an exec order from President Biden in the coming weeks.

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  • Sweat: Why your brain loves it when you exercise (and three at-home TikTok workouts).
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Fluor sounds like a trendy direct-to-consumer dough startup — it's actually a multinational engineering company that's building mini nuclear reactors.

Now, Fluor wants to press the green button. Tune in to our snackable 15-minute pod to hear why we might need a nuclear option to neutralize climate change.

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Authors of this Snacks own shares of: Amazon, Uber, and GM

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