Cathie Wood buys the dip in Zillow as the house flipping business ends.

Zillow Group, Inc., or simply Zillow, is an American online real estate marketplace company that was founded in 2006 and was created by Rich Barton and Lloyd Frink, former Microsoft executives.

The stock is down as much as 28% this week as it stumbles from the failure of its home-flipping business. As the economy slows house flipping business loses its luster. Zillow reported disappointing earnings and the company plans to take a $304 million write-down related to its buying Service. 

The stock is down as much as 28% this week as it stumbles from the failure of its home-flipping business

WEALTH TRAINING COMPANY

Despite the negative fundamentals Cathie Wood Buys the dip in Zillow with a nearly 300,000-share purchase

So, Cathie Wood sees a buying opportunity from Zillow’s recent share price collapse. 

Zillow, the online real-estate listing company announced third-quarter results in November that missed analyst estimates and included a $304 million write-down related to its housing inventory. The company is now officially ending its iBuying home service.

“We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too many earnings and balance-sheet volatility,” said CEO Rich Barton.

But as Zillow’s stock price tumbles, Cathie Wood Buys the dip with Wood’s flagship ARK Innovation ETF despite stock already underwater based on the November 3 pre-market decline.

We’ve determined the unpredictability in forecasting home prices far exceeds what we anticipated and continuing to scale Zillow Offers would result in too many earnings and balance-sheet volatility

RICH BARTON, CEO Zillow

So, Cathie Wood’s Ark appears to be sticking with the company, despite its home-flipping troubles being apparent for a while now.

Zillow’s business model was simply to buy homes, fix them up, and then resell them in 2018. But according to the company, a global pandemic made it nearly impossible to predict home price movements in the short term.

What was surprising is that despite home prices surging to record highs, Zillow was still unable to sell its housing inventory for a consistent profit. Instead, it often bought a home, invested a few thousand dollars for cosmetic touch-ups, and then quickly listed the house for a loss.

“Barton told a business network on November 2 that Zillow is not in a fire sale mode to get rid of its housing inventory. Nevertheless, the company is in a hurry to get them ready for sale” – Wealth Training Company

The winding-down of Zillow’s home-flipping business is likely to take several quarters as it sells the rest of its housing inventory. Zillow will also reduce its workforce by about 25%.

Barton told a business network on November 2 that Zillow is not in a fire sale mode to get rid of its housing inventory. Nevertheless, the company is in a hurry to get them ready for sale. 

Zillow stock is down nearly 30% this week alone and has plunged 42% year-to-date.

It appears the online real estate business model is not profitable, but Cathie Wood Buys the dip in Zillow

Will this be Cathie Wood’s Ark buy the dip big mistake, as the Fed indicates its intention to reduce its bond asset purchases? Perhaps with less of the central bank’s funny money sloshing around in the system the play dumb get rich strategy will no longer work.