Shares of Zillow dropped Wednesday, a day after the online real estate company reported a second-quarter loss on higher costs. Its adjusted results and revenue were better than analysts expected.
Late Tuesday, Zillow Inc. reported a loss of 30 cents per share for the April through June quarter. Stripping out stock-based compensation expense, the company earned a penny per share.
Analysts polled by FactSet expected a loss of 11 cents per share.
Costs more than doubled in the period to $57.3 million, as the company nearly tripled how much it spent on marketing and advertising, while technology and development costs nearly doubled. Zillow also added more employees.
Revenue surged 69 percent to $46.9 million thanks to the housing market rebound. Wall Street was looking for $44.4 million in revenue.
Daniel Kurnos of Benchmark said in a client note that Zillow’s mortgage revenue more than doubled in the quarter, and that the number of unique visitors in July jumped to more than 61 million from less than 56 million a month earlier. These factors, along with a plan to monetize rental properties starting in 2014, are giving Kurnos confidence that Zillow’s investment in marketing spending is starting to pay off.
The analyst maintained a “Buy” rating and raised the company’s price target to $105 from $75.
CEO Spencer Rascoff said in a statement that Zillow posted record revenue and traffic in the quarter. The company is also making great progress on getting more visitors, gaining market share and growing in emerging markets, he added.
Zillow’s stock fell $8.21, or 9.1 percent, to $82.50 in midday trading Wednesday. They are still near the high end of their 52-week range of $23 to $94 per share.