Zillow Group Inc. shares surged after the company reported record traffic to its websites, helping quarterly revenue beat expectations.
Zillow reported revenue of $768 million, topping the average analyst estimate of $618 million, as low interest rates and consumer demand for bigger living spaces pushed potential homebuyers online.
“Zillow will be the beneficiary of dragging the industry into the future,” Chief Executive Officer Rich Barton said in an interview. “This feels like a tectonic shift to me and not just a cycle.”
The stock surged as much a 15% after the results were released. The shares had gained 56% this year through Thursday’s close.
Barton said his company is benefiting from two trends: House-hunters are embracing virtual tours and other digital tools during the age of social-distancing. And Americans are looking for new properties not that they’re spending a larger share of their time stuck at home.
The pandemic also cut into the company’s business. A freeze in the housing market at the beginning of the quarter led Zillow to offer discounts to real estate agents. As a result, the company’s core Premier Agent business generated $192 million in revenue, down 17% from a year earlier.
The company also slowed its data-driven home-flipping business to a near halt, buying just 86 homes. It sold 1,437 homes, generating $454 million in revenue, though the segment still loses money.
”Zillow is probably the company best positioned to benefit from and lead the digital transformation of real estate as caused by Covid,” said Mike DelPrete, a real estate tech strategist. “But it still faces uncertainty around the business model.”