The day after its third quarter earnings report was released, Zillow’s stock tanked — dropping more in Wednesday's trading than it ever has in a single day's trading since since its IPO launched in 2011.
On Tuesday, the real estate giant released its third quarter earnings, reporting revenue for the third quarter increased 22% from the same quarter last year. However, the stock’s reaction on Wednesday seems to tell a different story.
Zillow’s stock closed down more than 26%, just below $30 per share. The stock dropped more than $10 over the course of the day's trading.
During this summer, Zillow’s stock hovered above $64 but it doesn’t seem like Zillow’s shareholders handle change well. Following the announcement of the company’s move into the mortgage space, the company’s stock closed down 16%, on the day after its announcement.
As CNBC points out here, Zillow missed estimates from Wall Street for its Q3 revenue, posting $343 million compared to the $344 million analysts had predicted. But the company's new business segment, its direct homebuying business called "Zillow Offers," saw a quarterly revenue of $11 million, overshooting company expectations of $2 million and $7 million.
The company also disclosed that it purchased 168 homes and sold 36 homes through Zillow Offers for the third quarter and is expecting to hold 300 to 550 homes in inventory as of Dec. 31, 2018.
Zillow Group reported that traffic for its companies’ apps and websites (including its namesake, Trulia, RealEstate.com and StreetEasy) reached an all-time high with more than 195 million unique users in July 2018 and increased 13% year-over-year to approximately 1.9 billion, according to the filing.
Despite the plunge in stock value, CEO Spencer Rascoff is remaining positive and explained that the company is experiencing “transformational innovation.”
"Zillow Group is undergoing a period of transformational innovation, including our new Premier Agent lead validation and distribution process, Zillow Offers, and now mortgage origination, which together will provide more of an end-to-end real estate transaction experience for consumers," Rascoff said in a statement. "We believe that these changes will have positive long-term effects for consumers, our industry partners and our business. It will take time for advertisers to adapt to these changes, but we are confident that they set us up for long-term growth."
Photo credit: Shutterstock.com