Investors on Wall Street are not being kind to the two purported leaders of online real estate: HomeStore and InterActiveCorp, which owns LendingTree, Domania, Realestate.com and recently acquired ServiceMagic.
Since May, Homestore (Nasdaq: HOMS) stock has fallen more than 50 percent to $2.67 per share today after reaching nearly $6 per share at the end of April. InterActiveCorp (Nasdaq: IACI) reached a high of $39 in October of 2003, but is trading at $22.57 today.
Earlier this week, HomeStore announced it likely will not achieve profitability this year, as some observers previously anticipated. The company narrowed its second-quarter loss to $4.3 million, or 3 cents a share, from $91.7 million, or 78 cents a share a year ago.
The second-quarter loss compares with a loss of $5.1 million, or 4 cents a share in the first quarter this year. Although Homestore this week reported its second year-over-year quarterly increase in revenue, CEO Mike Long said the company doesn’t expect profits this year.
“It is unlikely that we will be able to reach that goal,” Long said in an investor conference call this afternoon. Homestore’s goal of profitability has been set back by litigation expenses as well as expenses related to it’s compliance with Sarbanes Oxley.
Barry Diller’s multimedia juggernaut InterActiveCorp reported the volume of loan and real estate transactions closed dropped 16 percent from the second quarter of 2003 to the second quarter of this year, falling from $10.2 billion to $8.5 billion, and the number of transmitted loan and real estate requests fell 19 percent in that time, from 733,600 to 597,600, the company also reported.
InterActiveCorp’s holdings include home-shopping, ticket, travel, lodging, dating and mortgage and real estate-related businesses. The company reported overall revenue growth from $1.47 billion in the first quarter of this year to $1.5 billion in the second quarter. Total revenue was down, though, from the $1.53 billion reported in the second quarter of 2003. Revenue for InterActiveCorp’s financial services and real estate group reached $44.6 million in the second quarter of this year, up from $39.7 million in the first quarter of this year.
In the mortgage and real estate arena, InterActiveCorp owns LendingTree, ServiceMagic, RealEstate.com, GetSmart, and Domania. The company acquired ServiceMagic, a company that links consumers with prescreened contractors, real estate agents and lenders online, in July. In the second quarter of this year, ServiceMagic’s consumer service requests were up 84 percent over the prior year, the report states.
Diller said that the company’s acquisitions during the last quarter have “been very disciplined” and have either enhanced existing businesses or expanded operations into closely aligned areas of business. “We’re not diving into some acquisitions that were . . . speculative,” he said.
“Our entrance in real estate just began,” he said.
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