Shares of Zillow (ZG) are up 20% in premarket trading after the digital real estate company said it’s getting out of the home-flipping business more quickly than previously expected.
Zillow’s made the announcement as part of its fourth quarter earnings, and it comes after an attempt by the company to crack the “iBuying,” or instant buying market, in which it purchased homes directly from owners. Zillow last November that it’s exiting the business, admitting that its algorithms could not accurately forecast housing prices, putting the whole company at risk.
The company lost $261 million U.S. in the fourth quarter and $528 million U.S. for all of last year, with the entire deficit attributable to the home flipping business. But Zillow said it sold 8,353 homes in the period, beating its outlook for approximately 5,000 sales, and ended the quarter with about 10,000 homes in inventory.
Because of the speedier pace of home sales, revenue of $3.88 billion U.S. for the fourth quarter exceeded the $2.98 billion U.S. average analyst estimate, according to Refinitiv data.
For the current first quarter, Zillow said it expects total revenue of $3.12 billion U.S. to $3.44 billion U.S. Analysts had projected revenue of $3.26 billion U.S.
Zillow is returning to its focus on the marketplace, connecting buyers and sellers with tools and technology to simplify the homebuying process. That includes working with a vast network of real estate agents and helping consumers with their mortgages.
The company expects that to translate into $5 billion U.S. in revenue by 2025 and a 45% adjusted profit margin.
Zillow’s stock climbed as high as $59.04 U.S. following the earnings release. As of yesterday’s close (February 10) the share price was down 24% this year.
Related Stories
