Zillow (Z, Financial) shares surged by 23.77% as a result of its impressive third-quarter financial performance. The online real estate platform demonstrated growth across numerous segments, contributing to this stock movement.
The company's total revenue increased by 17% to $581 million, surpassing the guidance midpoint of $553 million and the analyst consensus of $554.7 million. Zillow's residential revenue rose 12% to $405 million, thanks to a higher number of transactions through Zillow agent partners. Rentals revenue increased by 24% to $123 million, while mortgage revenue soared 63% to $39 million.
Zillow introduced new technological enhancements, including AI-powered natural-search functionality. Additionally, its enhanced-markets strategy, which delivers a comprehensive real estate experience in several metropolitan areas, has shown success.
On the profitability front, adjusted EBITDA reached $127 million, surpassing expectations. However, on a GAAP basis, Zillow reported a net loss of $20 million, equivalent to $0.08 per share.
Looking forward, Zillow projects fourth-quarter revenue to range between $525 million and $540 million, which aligns with market estimates. The company anticipates adjusted EBITDA to be between $90 million and $105 million.
In terms of valuation, Zillow (Z, Financial) is currently priced at $72.63 with a significant market capitalization of $16.76 billion. The stock exhibits a price-to-book ratio of 3.48 and faces a severe warning sign regarding its declining revenue per share over the past five years. Despite this, Zillow demonstrates financial strength with a strong Altman Z-score of 5.64, indicating stability. The company is considered "Significantly Overvalued" according to the GF Value, which estimates the value at $48.93. Zillow's stock is outperforming in terms of recent momentum, evidenced by price change percentages of 20.62% over one week and 23.77% over one day.
