Redfin Stock Vs Zillow: Which Is Best?  (2024)

While plenty of industries have taken a hard hit in the midst of the COVID-19 pandemic, one area of the United States economy that seems to be doing just fine — more than fine, really — is the real estate market.

With the housing shortage in full effect, home prices at all-time highs, and the recent home improvement trend only getting more popular by the day, the real estate market is hotter than ever, even in spite of the coronavirus raging on.

Naturally, investors have hoped to get in on the action by investing in real estate stocks — namely, Redfin (RDFN) and Zillow (Z). These two competitors have been synonymous with the online real estate market for years now, and as a result, the two go back and forth on the stock market almost constantly.

But, when it comes down to it, which of these two companies comes out as the winner in the battle of Redfin vs Zillow stock?

Redfin Financials Vs Zillow Financials

At the close of Redfin’s most recent quarter in June of 2021, the company’s revenue had increased 120% year-over-year to $471.3 million. On the other hand, Redfin’s net income dropped 321% year-over-year to -$27.88 million during the same quarter.

Likewise, the company’s cash on hand reached an impressive $735.9 million during this second quarter, but its net change in cash plummeted $555.36 million.

Clearly, it seems for every positive improvement reported in the latest quarterly earnings, Redfin also discloses a corresponding negative change. Looking at the big picture, it makes Redfin’s financials look incredibly patchy.

Zillow, in comparison, saw a gross profit of $538 million for the second quarter of 2021, up 92% year-over-year.

The company’s revenue for the same quarter was even higher, a whopping $1.3 billion. Surprisingly, even with numbers as high as these, Zillow’s second quarter net income was still only $10 million for the second quarter of 2021.

This seems quite paltry, to be sure, but it’s worth noting that even just $10 million in net income from Zillow fares well compared to Redfin’s -$27.88 million in net income for the same quarter.

If these are Redfin and Zillow’s numbers in the present, what will the future look like for these two companies?

Redfin Forecast Vs Zillow Forecast

Looking forward to Redfin’s financial future, experts find themselves at something of a crossroads: Will Redfin’s price per share — which dropped from over $96 in February of 2021 down to under $46 in August of the same year — manage totick back up to its previous high, or will it continue this negative trend in the months to come and drop even lower than it already has?

The consensus is decidedly split.

Some financial analysts see Redfin shooting back up toward the $90 mark over the next twelve months, while others see it dropping even further to the $27 mark in that same period. Looking at the median forecast, this puts Redfin at $65 per share by this time in 2022.

Presently, Zillow’s stock sits at a price per share of just over $91. Analysts are much more bullish in Zillow’s case, with even the most reluctant bulls predicting the stock to hit $100 over the next twelve months and the most passionate predicting a price per share of $217 in that same period.

Looking at the median forecast for Zillow, and you still end up with a price per share of $163 by this point in 2022.

How Redfin Is Investing in Growing Itself

With these hard numbers out of the way, it’s worth taking a look at the strategies of each company to determine who comes out on top in theRedfin vs Zillow stock showdown.

Let’s start with Redfin, which reported a net income in the red for the latest quarter. As it turns out, Redfin’s net income went negative due, at least in part, to the company’s committal to growing itself going forward.

This includes acquiring rental media company RentPath for $600 million and the company’s recent rollout of Redfin Mortgage, a mortgage lending service for prospective home buyers using Redfin’s site to find a house.

While the company might be spending money just as fast as it’s coming in,it’s all in hopes of increasing growth (and increasing profits) down the line.

How Zillow Uses Technology to Get Ahead

It’s clear to see that Zillow’s financials and forecast are both much more promising than Redfin’s, and this might have something to do with the way Zillow utilizes the latest technology in order to set the company ahead of the pack.

The simplicity and ease of Zillow’s site makes the company the poster child for the current iBuying boom, where home buyers and home sellers can connect virtually and effectively eliminate the long, drawn-out process that comes with going through an agent.

Zillow and its signature Zestimate feature — which estimates a home’s value through the company’s proprietary formula — are so popular among home buyers and home sellers because of the sheer excellence and convenience of the technology, giving them a real advantage over the competition.

Redfin’s Market Share vs. Zillow’s Market Share

Before determining which is best in the Redfin vs Zillow stock debate, it’s important to take alook at market share and actual health of the marketin general.

In the first nine months of 2020 alone, Zillow had a 25% market share of homes bought or sold over the internet. Conversely, Redfin holds a market share of 1.14% in the U.S. residential market overall.

This number fluctuates often, and Zillow and Redfin have both seenmarket shares top the other’s in the past. Presently, though, Zillow is the one enjoying the larger market share.

The State of the Real Estate Market Today

It needs to be said that none of these numbers or strategies mean a thing if the real estate market isn’t in good shape.

The truth is that experts believe we have officially entered intoa housing bubble not unlike the one seen in the mid-to-late 2000s that eventually led to a financial crisis in the years that followed.

Despite the development of this potential bubble, it seems that buyers and sellers alike are not being deterred from real estate whatsoever. This could all change in just a matter of years, though — keep this in mind when investing in real estate stock.

The Bottom Line: Redfin vs Zillow Stock

While Redfinis currently priced lower per share than Zillow, thus giving retail investors and traders an opportunity to buy more shares at a lower price, Zillow proves in several different ways that it’s the stock worth buying right now.

Zillow might cost more per share, but the company’s financials are looking excellent in the present and are poised to look even better in the future.

It’s the clear winner in the duel of Redfin vs Zillow stock — just be sure to keep an eye out on the overall health of the real estate industry before banking on the long term performance of any real estate stock, because things are destined to take a turneventually.

The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.