Domain Earnings: Market Share Losses a Sore Point as Network Effects Degrade

We maintain our AUD 2.50 per share fair value estimate for narrow-moat Domain. The first half of fiscal 2024 saw steep price hikes deliver a strong headline result. But those gains are coming at the expense of Domain’s long-term competitive position and economic moat, in our view. We, therefore, lower our Capital Allocation Rating to Poor from Standard. At the current price, Domain shares continue to screen as materially overvalued and not reflective of Domain’s increasingly distant number-two position, behind wide-moat REA Group.