Zillow’s (Z) stock swooned by nearly 20% in early Thursday trading, with the real estate company battered by concerns that their nascent home-flipping program is a money loser.
On Wednesday, Zillow reported quarterly revenues of $599.6 million, compared with the comparable year-ago figure of revenues of $325 million, representing an 84% year over year gain.
However, its second quarter losses were $72 million, compared to just $3 million a year ago. Meanwhile, fears are mounting over the algorithm-driven home-flipping program called “Zillow Offers," which has a murky path to becoming profitable.
The program added seven new markets in Q2, but the company predicted it could lose as much as $80 million in the current quarter from Zillow Offers as the program expands.
“We’re far from being at what I would call scale,” Zillow’s CEO Rich Barton told Bloomberg in an interview. “I’m confident that when we do get to scale we will be able to do 400 to 500 basis points of profit off this business.”
Zillow Offers is the company’s attempt to get into buying and selling houses themselves, rather than just existing as a marketplace.
The “iBuyer” strategy is expanding rapidly, with the hope to be in 20 markets by the end of the year. Around 40% of the company’s revenue now comes from the program.
So far, though, Zillow’s big bet has not paid off. The shares swooned below $40 on the Nasdaq in early Thursday dealings, before clawing back some of those losses. It was last trading at $40.77.
Calder McHugh is an Associate Editor at Yahoo Finance. Follow him on Twitter: @Calder_McHugh.