Who Is the Amazon of Real Estate?

Amazon (NASDAQ:AMZN), of course, is the king of internet retail. But internet retail is a vast opportunity, and in some sectors Amazon isn’t competing at all. For instance, housing and automobiles are two huge sectors of the retail economy, and Amazon simply isn’t a factor. Will the internet radically shift how we buy and sell homes? Of course! But the trick is to figure out which company is going to win this race. Who is going to be the Amazon of real estate?

Maybe it’s Zillow or Opendoor Technologies (NASDAQ:OPEN), the companies leading the iBuyer revolution. Or maybe it’s Redfin, another company that is trying to shift the real estate market online.

But I’m seeing a winner, and it’s none of those companies. The company that’s actually winning by leaps and bounds is eXp World Holdings.

Don’t believe me? Well, let’s look at some revenue growth rates. If you want to call yourself the “Amazon” of anything, you’d better have massive revenue growth. I expect a high percentage of growth, like what Carvana does in automobiles, or what Sea Limited is doing in Southeast Asia. I’d like to see triple-digit-percentage growth. Here’s what Zillow, Redfin, and eXp World are doing in virtual real estate sales.

CompanyQ3 Revenue (2019)Q3 Revenue (2020)Revenue Growth Rate
Zillow (NASDAQ:Z)$745 million$657 million(11%)
Redfin (NASDAQ:RDFN)$239 million$237 million(0.7%)
eXp World (NASDAQ:EXPI)$282 million$564 million99.9%

That’s dramatic outperformance. There’s no way I’d buy shares of Zillow — currently valued at $30 billion — when the company’s revenue is going in the wrong direction. I’d much rather own a piece of $7 billion eXp World.  

What about Opendoor, the original name in the iBuyer space? Are its sales spiking dramatically? No, they are not. Opendoor recently went public, after a merger with a SPAC late last year. While it hasn’t broken out quarterly numbers yet, its numbers from the first half of the year were also negative. Revenue actually dropped from $2.2 billion to $1.9 billion.

Why is eXp World winning?

One important distinction is the difference in business models. eXp World is not trying to reinvent the wheel. Unlike Zillow and Opendoor, this company does not own any properties.

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