Zillow founder Rich Barton is a billionaire after strong results of a
risky new home buying strategy sent shares up 17% Thursday.
The result came almost a
year to the day since he returned as CEO.Zillow shares closed above $64 a piece
for the first time since June 2018.
Barton owns 15.8 million shares, including
over 700,000 he bought in November 2018 when the stock was at a low point.
In April 2018, Zillow made a sharp turn toward the transaction Barton had long coveted, entering the fledgling on-demand home buying market—known as “ibuying”—with a service called Zillow Offers. Prospective sellers in select markets can go to the Zillow listing for their own home and ask the company how much it is willing to pay for their houses.
In February 2019, the company announced Barton would return as CEO to lead the transition.
Despite Barton’s popularity, his return did not entirely calm investors. Concerns remained over how the company could manage an expensive and operationally intense home-flipping business alongside a high-margin ad sales one. The stock struggled through 2019.
With the release of its full earnings for the year on Wednesday, Zillow showed enough momentum in both businesses to send the stock sharply higher.
Last year, Zillow purchased 6,511 homes and sold 4,313 of them, bringing in $1.4 billion in home sales revenue. In the fourth quarter, when nearly half of the sales occurred, the average price per home was $317,155. Home revenue for the quarter was $603.2 million, with a pretax loss of $12.186 million. Meanwhile, the media business had $1.3 billion in revenue for the year, an increase of 6%.
Zillow has predicted that in under five years it will be buying 5,000 homes a month—1% of all U.S. residential sales—and booking home sale revenue of $20 billion a year, with $2 billion or so from selling real estate ads.
