In real estate technology news, Zillow has announced the acquisition of real estate search site HotPads for an estimated $16 million in cash This acquisition is supposedly slated to grow Zillow's "rental audience" as well as extend the company's marketing for rental pros.
Not a spanking new development, HotPads launched in 2005 to help users with rentals. The platform expanded to include sales and even vacation offerings subsequently, and with some success. In direct competition with sites like Apartments.com, Craigslist and, even giant Zillow, HotPads is actually the sixth acquisition by Zillow in the last two years. Spencer Rascoff, CEO of Zillow, offered this via MarketWatch:
"This acquisition represents a significant step-change for Zillow Rentals, allowing us to dramatically increase the number of leads we send to landlords. HotPads has a younger, complementary and rental-focused audience. Now Zillow will become even more relevant to consumers at the beginning of their real estate life cycle. In addition, by acquiring an amazing engineering team, with a deep understanding of how people search for rentals and become tenants, we expect to accelerate our innovation and monetization of our rental marketplace."
At close yesterday 26.23 +0.12 (0.46%) Zillow stock tumbled last month on the news of SEC disclosures concerning correspondences between the SEC and Zillow's CEO Spencer Rascoff. Further stock price tail-off occurred when the company's quarterly projections failed to meet analyst expectations. Yesterday, despite the news of Zillow's HotPads buy, The Street downgraded "Z" stock from buy to sell due in large part to weak operating cash flow.