This downgrade was driven by a belief that traffic growth for both the Zillow and Trulia bands is slowing, potentially a sign of market saturation.
In addition, Barclays’ Merwin believes that premier agent net add rate is also slowing and the expectation that Zillow will offer the larger brokerages significant discounts to get direct access to their listings inventory.
Merwin also stated that in January 2015, monthly traffic grew at 24 percent, compared with 52 percent growth in January 2014. Since January this year, Barclays noted that Zillow stopped reporting monthly traffic trends and this stoking uncertainty.
Overall, shares for Zillow are down 40% from a high of USD 165 when there were strong expectations tied to the Trulia acquisition.