Snap Inc Valuation Method For The Ipo

Snap inc valuation method for the ipo

Case | HBS Case Collection | August 2019 (Revised December 2019)

Zillow Offers: Winning Online Real Estate 2.0

Luis Viceira, Marco Di Maggio and Allison Ciechanover

Founded in 2005, Zillow had become the leading online real estate and home-related marketplace.

Snap inc valuation method for the ipo

The brand was recognized as a trusted resource for players in the real estate market, providing information and transparency on home prices. Revenue, which was historically derived primarily from advertising fees paid by realtors and mortgage lenders, totaled $1.3 billion in 2018.

Snap inc valuation method for the ipo

This was in the process of changing, however. The company had entered the direct home buying and selling market in 2017.

Snap inc valuation method for the ipo

To Zillow, the move was a logical extension of its business model. Research showed that there was pent up desire to sell homes, but that sellers disliked the conventional process.

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Zillow Offers made home selling easy and fast – for sellers of homes that met certain criteria, Zillow Offers made an offer within 48 hours of the seller submitting a request for an offer online. Zillow Offers provided sellers a fair price and a guaranteed cash close, then performed renovations and hoped to sell the home within a target of 90 days, although actual times varied by market.

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The company’s stock was more volatile in the period since launching Zillow Offers and some industry observers wondered if it was in part due to the market’s perception of the risks associated with the new business.

CEO Rich Barton believed the “instant buyer” or iBuyer market could one day account for up to 30% of all domestic real estate transactions and that Zillow Offers could bring in an additional $20 billion in annual revenue within three to five years.

Snap inc valuation method for the ipo

But there remained work to be done to improve transaction metrics, fend off competition from well-funded startups and incumbent realtors, and convince shareholders of the attractiveness of the new businesses.

Keywords: real estate; corporate culture; Intermediation; brokerage; Startup; Evaluating business investments; Property; Technology; Business Model; Expansion; Business Startups; Real Estate Industry; Media and Broadcasting Industry; United States;