Zillow Doubles Down on iBuying by Launching a Brokerage in a Move That Risks Its Core Business

Zillow has recently announced its intent to launch an in-house brokerage business in 2021 in a bid to streamline its fledgling iBuying business. This move comes as a surprise, given the firm’s prior insistence that it had no interest in operating as a brokerage, instead emphasizing that it views its "Premier Agents" as business partners. We see the strategic rationale behind this decision and think it further underscores Zillow’s commitment to the iBuying business. However, we maintain our $40 per share fair value estimate for no-moat rated Zillow as the news fails to change our assessment of the firm’s long-term prospects.