We Downgrade REA Group's Moat to Narrow

We expect REA Group’s near-term challenges to center on navigating significant regulatory and competitive tension. REA Group has come under increasing regulatory scrutiny for anticompetitive behavior, which we find understandable, given the dominant position it holds and the steep annual price hikes it puts through, both from direct price hikes on existing tiers and through the introduction of new listing tiers, which we consider price hikes by a different name. The acquisition of competitor Domain by CoStar, and its intention to increase competition, adds to near-term challenges.