Zillow (Z), the online real estate marketplace, yesterday completed its previously announced $50 million all cash acquisition of StreetEasy, a New York focused real estate marketplace. The acquisition had been announced by Zillow on Aug 19. The acquisition brings Zillow nearly 1.2 million monthly unique users mainly consisting of home shoppers in the New York region. Zillow has paid a value per StreetEasy monthly unique user of $41.67 compared to $55, the price at which the market currently values every monthly unique user at Zillow.
The StreetEasy acquisition can go either way for Zillow. It could prove to be a sound strategic acquisition giving the company a stronghold in the largest real estate market in the US, or it could prove to be a disaster stretching the company too far. The company still hasn't convinced investors of its ability to consistently generate profits and cash flows. The stock seems to have benefited from the overall improving sentiment in the US real estate sector registering a year-to-date gain of 225% while Trulia (TRLA) gained 151% in the same period and Move Inc (MOVE) moved up by 94%.
Zillow stock price chart
Source: Zillow stock price chart by Amigobulls
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