THE DIGITAL REVOLUTION IN REAL ESTATE: EVALUATING ZILLOW GROUP’S EQUITY PERFORMANCE AT THE CROSSROADS OF FINTECH AND E-COMMERCE

Abstract This master thesis integrates an equity research report on Zillow Group with a comprehensive literature review of fintech valuation methods. The literature review critically examines contemporary valuation techniques tailored to fintech, including pre-revenue methods such as the Risk Summation and VC Methods, as well as revenue-based approaches like Discounted Cash Flow (DCF) analysis and the Multiple Method. By highlighting the strengths and limitations of these methods, the review aims to equip investors with effective tools for valuing fintech companies. Zillow Group was chosen due to its unique position at the intersection of real estate and fintech, revolutionizing the digital real estate market. The equity research report underscores Zillow's dominance, evidenced by its 224 million unique monthly visitors in 2023. Zillow's strategic shift to an asset-light model has resulted in gross margins exceeding 80%, positioning the company for sustained profitability. The report anticipates favorable market conditions, with decreasing interest rates and increasing homeownership rates among millennials and Gen Z, expected to enhance Zillow's revenue growth. Utilizing a DCF model, the report values Zillow at $65.8 per share, representing a 21.6% upside from the current price. This valuation, combined with Zillow's robust market position and positive outlook, underpins a buy recommendation. This thesis contributes to the academic literature on fintech valuation and provides practical insights for investors, aiming to enhance the accuracy and efficiency of capital allocation within the sector.