Australian Billionaire James Packer Can’t Keep His Hands Off The Red Hot Zillow Stock

Australian James Packer’s firm Cavalane Holdings have reportedly bought a 9.4% stake in Zillow Inc. (NASDAQ:Z) to become the second largest shareholder at Zillow. The move comes as a surprise considering the huge gains the stock has experienced this year. The stock has gained over 260% in the year-to-date and seems highly overpriced considering the fact that the company hasn’t seen profits and earnings to justify the huge gains. The PE ratio of this firm is infinitely high since it hasn’t made consistent profits in the last four quarters. Considering that Zillow is a growth firm, let’s look at the stock price through another metric, the price-to-sales ratio. The last twelve month price to sales ratio of Zillow is currently at 25, which is way too high even for a high growth company. To put things in perspective Amazon, one of the fastest growing companies by revenues has a last twelve months Price-to-sales ratio of 1.44 against Zillow’s 25. This metric also suggests that the Zillow stock is highly overvalued in the market and it may only be a matter of time before the stock price may undergo a correction to bring the price to more realistic levels. This would ideally be the time when long term investors would look to book profits rather than going in for further investing in this stock and this move from James Packer is baffling. The stock which had seen a 1.42% rise in the last trading session is down 3% in pre-market trade from its Wednesday close at $100.50.

To see Zillow’s latest stock price movement, click here (NASDAQ:Z)

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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Comments on this article and Z stock

This might be just a show of confidence or are we missing some important news Mr James is privy to? But definitely a baffling investment decision on the face of it.
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