Something fishy with Zillow's revenues

Great analysis by Mike DelPrete.  It’s as if an investment bank reported revenues based on the gross value of securities sold through its brokering business.  Another sleight of hand relates to ‘holding cost’ since the reported amount ‘excludes expenses incurred during the period that are not related to homes sold during the period.’  The good news is that Zillow sold 115 more homes than it bought in 4Q19; the bad news that ended 2019 having bought 2,198 more homes than it sold.  What’s clear is that the company’s balance sheet has changed dramatically, with Inventory ending the year at 13.6% of assets, up from 3.8% at 2018 year-end.  Since the $1.5B of credit facilities is already at 46% utilization, I’d keep a close eye on the velocity of homes inventory in 2020.  Zillow may discover that what they thought was a ‘shipping’ business was, in fact, a ‘storage’ business.