St Croix you bring sone interesting topics to the table but my concern is not all revenue is equal. For example carvana now has over $400 million in long term debt. Which is fine for now. They could have years of growth with equity issuance and debt. But once I hear articles about concerns over carvana’s debt, I’d probably sell. Consider that to Alteryx, which just recently had $12 million in debt. And both of these companies are generating about the same gross profit. One is in a scalable business one requires a huge amount of investment for the same gross profit growth.
Zillow is becoming more interesting. But I’d rather not buy a company that buys houses and resells them. Unless they are working with a bank that gives unlimited credit line and they’re actually good at what they do. TBD. Still requires debt though. Is Keller Williams good big to compete? Highly unlikely. Even open door. VC can only take you so far.
Historically these cash buyers will only buy at a huge discount but if Zillow is giving full price easily, and able to make a slim margin on it, that’s a huge game changer.
Again the revenue as a result is only pass through, but the gross profit could be interesting. Still something that could become a mess in a down real estate market.
Another reason assets light companies are ideal… but anything can happen within a few years.