Investors are turning against the real estate information website operator after it posted a disappointing outlook for the new quarter.
Looking back, Zillow held up just fine in Monday night's earnings report. Revenue soared 67% to $31.9 million during the third quarter, just ahead of the $31.7 million that Wall Street was forecasting. Adjusted earnings clocked in at $0.07 a share, matching analyst estimates.
The former dot-com darling -- which generates 74% of its revenue from real estate brokers and other industry pros that pay premiums for targeted ads and enhanced features -- is simply not closing the sale when it comes to the quarter that started last month.
Zillow is targeting revenue of $30 million to $31 million for the holiday quarter. That may represent a healthy 51% to 56% year-over-year spike in revenue, but it's not good enough. For starters, Wall Street was calling for Zillow's top line to soar 64% during the period. Even at the high end of the range, investors are still looking for a sequential dip. Yes, real estate is a seasonal business, but analysts were still holding out for sequential improvement.
There may be a bargain here, eventually, but investors know that every stock is bought and sold on an "as is" basis.
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Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. Motley Fool newsletter services have recommended buying shares of Zillow.