Coronavirus Crisis Forces Zillow and Redfin to Pause their iBuying Efforts

Zillow and Redfin recently announced that they are completely halting their iBuying businesses as the coronavirus crisis rages on. Although home sales were proceeding nicely prior to the crisis, so called "stay-at-home" orders that have been issued across much of the U.S. threaten to force the housing market to screech to a halt. With citizens limited in their opportunities to exit the house, the open houses so characteristic of the home-buying process have become increasingly rare. After updating our valuation models to incorporate the impact of the coronavirus outbreak, we are decreasing our fair value estimates for no-moat-rated Zillow and Redfin. Our fair value estimate for Zillow decreases to $33 per share from $41, while our fair value estimate for Redfin decreases to $23 per share from $26.