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Down 19%, Trulia gears up for real estate 'arms race'

With its stock nose-diving on Friday, Trulia CEO Pete Flint, defended the online real estate company's decision to ramp up spending on marketing during a CNBC appearance.

Investors appeared to take issue with the rapid rise in expenses at Trulia, sending shares into a 19 percent tailspin at one point Friday afternoon. During an interview on "Squawk on the Street," Flint said his $45 million strategic marketing campaign seeks to take a big chunk out of a $27 billion market in real estate advertising in the U.S.

(Read more: Trulia profit misses estimate as marketing expenses jump)

"We think this is the right long-term opportunity for the business," Flint said. "We see a tremendous opportunity."

Trulia's chief rival, Zillow, also revealed a move to dramatically increase spending on advertising and marketing when it reported earnings Wednesday, to $65 million in 2014 compared with $40 million in 2013. Zillow shares were also down Friday, falling more than 8 percent during afternoon trading.

CNBC's Jim Cramer said he sees an "arms race" brewing between the two companies.

"Did you see Trulia declaring war against Zillow? These companies are spending fortunes," Cramer said during an earlier appearance on "Squawk on the Street." "If those two companies came together it would be remarkable. But they don't like each other. It's not collegial."

(Read more: Zillow warns on profit due to higher advertising costs)

Trulia acquired a marketing company last year, and Flint told CNBC on Friday that he was open to further buying opportunities.

"We see this as an industry in consolidation," Flint said. "Only a couple of players will survive and scale over the next several years."

—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street." Reuters contributed to this report.

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  • Diana Olick serves as CNBC's real estate correspondent as well as the editor of the Realty Check section on CNBC.com.

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