Stock of the Week: Zillow

Feeling Lucky? This is likely the most expensive stock in America!

Andrew Willis 11 January, 2021 | 4:28AM
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In the first Stock of the Week of the New Year we wondered: what would be the most expensive bet you could make right now? In our mind, that would be if you were optimistic enough to buy the most overvalued stock in our coverage universe, which, surprise, surprise, is related to – houses!

While perfecting a model of internet, media and technology-based revenue streams based around real estate, Zillow (ZG) acquired competitors and now holds the position of first – and third most-visited real-estate websites.

That’s solid. However… equity analyst Yousuf Hafuda suggests that more recently, the company’s business model may have gone from great investment territory to more of a gamble.

Zillow is focusing on a relatively new ‘iBuying’ model, where it makes quick offers to purchase homes in exchange for discounted prices – and then sells them on the open market for a profit. This ‘digital flipping’ is innovative and could be a hit, but the company is now holding an inventory of houses – along with all of their economic sensitivity. That’s why our uncertainty rating on this one is extreme.

Still, Zillow isn’t the most expensive stock in the world. According to our fair value estimates, that slot is claimed by China’s largest SUV and pickup truck manufacturer Great Wall Motor Co (02333), which is trading at a premium of more than 300%. At the other end of the spectrum is the cheapest stock in our coverage universe – that’s trading at a 70% discount! Find out more next week!

For Morningstar, I’m Andrew Willis.


Editor's Note: All images are courtesy of and AP Images. 

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Zillow Group Inc Class A43.35 USD-1.28

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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