Zillow acquires NYC listing site StreetEasy for $50M

Zillow is also proposing a public offering of 2.5M Class A shares equivalent to $220M

That HGTV show “Selling New York” is very deceptive. The show features rich Manhattan socialites and those who finally “made it” hunting for the perfect apartment—like a waterfront condo on the Upper West Side, preferably one with a separate entrance for Plebeians. Oh! Here’s one!

My experience was very different. It went something like this: “so I understand you have an attic crawl space to rent out.” “Yes, but there are currently 57 other applicants so tell me what makes you unique.”

I’m not sure which experience best represents that of the average Zillow user, but now the site will have access to even more home hunters. Zillow announced Monday that it is acquiring New York City real estate site StreetEasy for $50 million in cash.

StreetEasy has some 1.2 million monthly unique users, most of whom are home hunters, and gives Zillow a strong foothold in the New York City real estate market—where the average 500-square-foot studio apartment listing falls somewhere around $648,000.

The StreetEasy brand will continue to operate independently and CEO and co-founder Michael Smith will report to Zillow CEO Spencer Rascoff. All 34 StreetEasy employees will stay on.

Without breaking out hard numbers, Zillow says it’s already a leader in NYC, but sees StreetEasy’s deep data and network effect as a valuable complement to Zillow’s NYC offerings. A Zillow spokesperson also says there’s a great opportunity for mobile. StreetEasy has an iOS app and Zillow has 24 apps. Some 60% of Zillow’s traffic comes from a mobile device. On weekends, that surges to 70%.

"Simply put, StreetEasy has cracked the code in New York," said Spencer Rascoff, in a statement. "They now have a local network effect where nearly every New York broker is active on StreetEasy because of the site's large audience and comprehensive data."

Earlier this month, Zillow posted its second quarter earnings, which included $46.9 million in revenue, an increase of 69% from $27.8 million in Q2 2012. The company also posted an all-time traffic record with 61 million unique monthly visitors in July 2013, an increase of 66% over the same quarter last year.

But EPS nosedived. Zillow suffered a loss of $0.30 a share, compared to a profit of $0.4 per diluted share in Q2 2012.

Shares were down 3.94% Monday morning to $87.63, from $91.22 Friday at the close. 

In addition to its acquisition of StreetEast, Zillow also announced that it's proposing a public offering of 2.5 million shares of Class A common stock, which equates to $220 million. Zillow says it plans to use the money for "general corporate purposes," including working capital, sales, and marketing, acquisitions, and so on. 

Image source: cheaphotelsinnyc.org