Zillow in Crosshairs
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Steve Eisman, the hedge-fund manager famous for betting against the US housing market in 2008 explains why he is shorting online real estate company Zillow.
“I would say Zillow has one of the most flawed business models I’ve seen in a very, very long time,” he said during an interview on CNBC.
“They had a good business which was their internet real estate platform. The growth in that has slowed dramatically so that now the growth is zero…
The most problematic is what they call their, I believe, iHome business, an internet buying business where they actually go out and buy homes and flip them. I actually think the company doesn’t understand the risk, the real risk of this business which are massive. And one of the ways you can see that as last night on the conference call the first words out of the CEOs mouth when he talked about this business, was the to how big the TAM was, the total addressable market. And of course, the real estate market, United States is very, very large. But it’s a miss application of the word TAM, to apply it to the real estate market, because there really is no TAM, and the way people think about in terms of the internet, there are thousands of many markets all over the United States. They’re all local, they’re all extremely different. They all have incredibly different risks…
Zillow Model Slammed by Steve Eisman: Watch Steve Eisman’s interview and commentary with Frank Garray below
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