Zillow Group NASDAQ: Z, ZG Recommendation: Buy

Zillow Group

NASDAQ: Z, ZG

Recommendation: Buy

Dane Williams

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Buying and selling a home sucks¡­

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¡­but it doesn¡¯t have to

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Investment Thesis

Recommendation:

I am recommending a BUY for Zillow Group (Z, ZG), because they have a massive competitive

advantage in the emerging online direct home buying industry, which sets them up for substantial

long term growth.

Rationale:

Zillow¡¯s strong core business of providing online information about homes and acquisition of

Mortgage Lender¡¯s of America puts them in a position to simplify and control the entire home

buying process with their new Zillow Offers business. Ultimately, Zillow is at the forefront of an

emerging market which opens up an entirely new source of revenue.

1. Strong core

internet business

with lots of data

2. Launch of

Zillow Offers

model for buying

and selling

4.

Revolutionize

the home

buying

experience

3. Acquisition of

Mortgage

Lenders of

America

Price Target: $48.02

37% upside to

current price of

$35.11 (ZG)

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Company Overview

Company Profile

60

25000000

50

20000000

40

15000000

30

10000000

20

5000000

10

Revenue Breakdown (3 Months Ended Dec. 31 2018)

11%

Premier Agent

12%

Rentals

Mortgages

6%

61%

10%

Other (1)

Homes segment

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Adj Close

Total Revenue By Year (millions)

$1,400

20.0%

$1,200

15.0%

$1,000

10.0%

$800

5.0%

$600

0.0%

$400

-5.0%

$200

-10.0%

$-

-15.0%

2012

2013

2014

Revenue

Sources: Zillow 10K

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Volume

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6

0

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5

0

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?

30000000

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?

70

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Zillow Group, Inc. was founded in 2006 in Seattle by

Richard Barton and Lloyd Frink, who are former

Microsoft executives and co-founders of travel

website Expedia

Specializes in the end to end lifecycle of owning and

living in a home: buying, selling, renting, financing,

remodeling, etc.

, along with Zillow¡¯s other subsidiary¡¯s are

the leading online real estate platform

In August 2016, Zillow Group split into Z and ZG,

with C shares trading under the old Z ticker and A

shares trading under the new ZG ticker

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Historical Stock Chart Since IPO

2015

2016

2017

2018

Ebitda Margin

5

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