The 10th Annual New York Value Investing Congress takes place in New York on September 8th and September 9th 2014. ValueWalk will be providing coverage of the event- below is a summary of a presentation by Andrew Left on the myth of Zulia.

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Andrew left

Andrew Left is Executive Editor of Citron Research. He has the longest published and most highly predictive track record of any market commentator or columnist on the specific topic of fraudulent and over-hyped stocks. Mr. Left has been quoted in the Wall Street Journal, Barrons, and Fortune, and he has been interviewed on CNBC. Mr. Left was an invited panelist at Columbia University’s China Business Conference 2012, and his research on Longtop Financial is excerpted with permission in a Harvard University Business School case study.

Andrew Left The Myth of Zulia

The combination of Zillow Inc (NASDAQ:Z) and Trulia Inc (NYSE:TRLA)

combined market cap of nearly $8b

2014 estimated EPS has come down 73%, while stock is up 400%

Zillow revenue sources

21% display

9.7% mortgage

65% premier agents revenue

(write up on citron research website)

he hates the business model

Zillow Inc (NASDAQ:Z) is not giving brokers real value

finally got “change” — going over the fab plus featured agent listing

competitors can’t touch this offer — $175 for coldwell banker pricing

Barrons article on beware of zillow

23% of all listings cannot be sold by Zillow Inc (NASDAQ:Z), because they have a deal with realogy

Andrew Left: insider selling is INSANE

CEO and CFO would not even look at the realogy pricing deal

2 weeks ago, the regional realtors struck a deal with zillow, as protected listings (essentially real estate taken off the market, it can’t be sold)

These are not premier agents, just listing agents, but listing is protected bc zillow struck a deal with these regional realtor firms

Keller Williams is the largest broker in the world as an independent

Keller WIlliams has 100k agents.  KW directly uploads their info and listings to zillow, so they control the pictures and detail info (KW puts agent info in the detail section)  Agents are not allowed to put their agent info in details if it comes from the MLS directory

So Keller WIlliams is NOT paying zillow and zillow cannot list agents on the listing pages

Andrew Left: What is Zillow worth???

the news and industry are against them…

challenged business models trade at 1.5-2x revenues

if Zillow Inc (NASDAQ:Z) traded at 2.3x revenue the stock price of the COMBINED company based on 2014 estimates, the stock is worth around 22.50

if zillow/trulia matures and they happen to somehow hit $200m in ebitda at 12x ebitda = 2.4b or $42/share on a fully diluted basis for combined company