Zillow had some major seesaw action occur with its stock on Tuesday, and Jim Cramer thinks this could have actually been a good thing for the market.
As the nation's largest online repository for home values and listings, Zillow cut its full-year revenue guidance on Tuesday, stating that 2015 would now be considered a transition year due to the slower than expected pace it took to get FTC approval to acquire competitor Trulia.
The stock plummeted on this news, falling $12 at one point before recovering to end the day down only $1.29. Cramer suspected investors were able to shrug off the news because the stock had already fallen dramatically this year and expectations were already low. Basically, no one was looking for a blowout quarter anyway.
"Last night I said some publicly held companies would be worth twice what they are selling for if they were private. Zillow is one of them," the "Mad Money" host added.
At this point, could the stock be too cheap to ignore? Cramer spoke with Zillow CEO Spencer Rascoff to find out.
Rascoff explained that in the eight weeks since it has received FTC approval, the company has integrated important parts of the product in the rental, mortgage and display advertising areas. This means that Zillow now has MLS listings from nearly every part of the country, which improves listing quality dramatically.
"We wanted to come out today and give this operating update because it has been eight weeks since the closing of the Trulia deal, and we had a lot of news to share," Rascoff said.
The CEO explained that during the FTC review process, Trulia's core business lost a bit of momentum in audience growth and ad sales. And while Zillow has taken the necessary steps to regain the momentum, this was the catalyst for the announcement on Tuesday.
"Zillow intends to end up capturing the lion's share of the $13 billion in real estate related advertising. We are just trending a couple of quarters behind; 2015 is going to be a transition year, and the long-term story of 2016 and beyond is still very bright."
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When Zillow announced the deal with Trulia last summer, it estimated that it would result in $100 million in annual cost savings and avoidances. Rascoff assured investors that Zillow is still on track, and he feels very good about the synergy numbers previously provided.
In fact, the CEO added that his main focus is to complete the integration of the agent ad business by the end of the year. Once that occurs, the company will be in a good position for 2016.
"From Zillow's perspective, I think that there are a lot of benefits to being public. I don't regret being public at all, even on volatile days like today," Rascoff said.
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