🍋 Flipping is a Flop

Author

Short Squeez
February 11, 2022

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"When I’m no longer rapping, I want to open up an ice cream parlor and call myself Scoop Dogg." — Snoop Dogg

Good morning and Happy Friday! Another day, another wild inflation reading. CPI for January was up 7.5% on annual basis, beating estimates of 7.2% and is the highest level since 1982. Affirm's social media intern probably lost their job yesterday after they accidentally tweeted out earnings ahead of schedule and the stock crashed 21%. Snoop Dogg has acquired Death Row Records, who released his first album almost 30 years ago. Elon Musk has satellites coming home, and 579,000 cars as well. Teslas are being recalled for "Pimp My Ride" style external speakers that can affect a frequency electric cars are required to emit. 

Please find the revised Wall Street compensation survey results here. 

Today's sponsor Daloopa, which helps you become a better financial modeler, is giving away 4 excel models (AAPL, AMZN, PTON, NKE) for free. Get yours here.

1. Story of the Day: Flipping is a Flop

If you thought you made some bad financial decisions last year, don't feel bad. Zillow definitely did worse than you, and lost $881 million trying to flip homes in 2021.

As financial powerhouses test the waters in the single family residential game, Zillow showed us that it's not a guaranteed profit center, despite what passive income gurus on TikTok tell you. Zillow said on Thursday that its algorithmic strategy lost roughly $25,000 per house sold, before interest expenses.

The operation was shuttered in the fall, but was still the anchor that dragged down the whole ship in 2021. Despite having a profitable home listing and advertising business, Zillow still had a net loss of $528 million dollars. Or about the price of 4 condos in Silicon Valley.

Even though the flipping business accounted for most of Zillow's revenue, it made up none of their profits. Zillow said the algorithm failed to predict movements in housing prices, and the disaster led to 2,000 jobs (one quarter of their staff) being cut. They also wrote down losses of over $500 million on the value of the homes still connected to its home-flipping business.

Zillow stock has lost three-quarters of its value since reaching a record almost a year ago. Stock was up 15% in extended trading due to the market reacting positively to news that Zillow is winding down its home-flipping business faster than expected.

Short Squeez Takeaway: Home flipping might be an art more than a science. Still Zillow should have better tested its home-flipping algorithm before buying houses worth millions of dollars. With 8,600 homes still on the books, Zillow should look into converting the homes into NFTs, getting Gary Vee & co on board and dropping them on OpenSea. The whole collection will guaranteed be sold out in 169 seconds. 

Source: WSJ

2. Markets Rundown

All markets down after 10 year UST yields rise above 2% and inflation hit a record 7.5%.

Movers & Shakers

  • (+) Walt Disney Co ($DIS) +3% thanks to earnings beat driven by more than estimated Disney+ subscribers and rebound in parks business.

  • (+) Kellogg ($K) +3% after releasing profit growth outlook for a full year that beat expectations.

  • (–) Lumen Technologies ($LUMN) -16% with investors worried that negative guidance will lead to dividend cuts.

3. Top Reads

  • The Senate’s top stock traders (Axios)

  • TikTok shares more of your info than any other app, but it's unclear where it goes (Fox)

  • Uber making a U-turn (WSJ)

  • Is Meta the beginning of a big tech avalanche? (Phil Bak)

  • @Twitter: U a disappointment (The Irrelevant Investor)

  • Carl Icahn had a farm, E-I-E-I-O (WSJ)

  • Can you cure inflation with a recession? (Capital Spectator)

  • The world is roaring back (Axios)

  • Your neighbors are overcompensating (WSJ)

  • Surefire way to lose money trading (TraderFeed)

A Message from Daloopa: Improve Your Work-Life Balance, Let Daloopa Do Your Modeling

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“Daloopa collects literally everything a company discloses.”

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4. Book of the Day: Stolen Focus: Why You Can't Pay Attention and How to Think Deeply Again

In the United States, teenagers can focus on one task for only sixty-five seconds at a time, and office workers average only three minutes. Like so many of us, Johann Hari was finding that constantly switching from device to device and tab to tab was a diminishing and depressing way to live.

He tried all sorts of self-help solutions—even abandoning his phone for three months—but nothing seemed to work. So Hari went on an epic journey across the world to interview the leading experts on human attention—and he discovered that everything we think we know about this crisis is wrong.

We think our inability to focus is a personal failure to exert enough willpower over our devices. The truth is even more disturbing: our focus has been stolen by powerful external forces that have left us uniquely vulnerable to corporations determined to raid our attention for profit. Hari found that there are twelve deep causes of this crisis, from the decline of mind-wandering to rising pollution, all of which have robbed some of our attention.

In Stolen Focus, he introduces readers to Silicon Valley dissidents who learned to hack human attention, and veterinarians who diagnose dogs with ADHD. He explores a favela in Rio de Janeiro where everyone lost their attention in a particularly surreal way, and an office in New Zealand that discovered a remarkable technique to restore workers’ productivity.

“Some 57 percent of Americans now do not read a single book in a typical year.”

5. Short Squeez Picks

6. Daily Visual: COVID's Crashing

Change in COVID cases reported per 100k people

Source: Axios

7. Daily Acumen: 90-90-1 Rule

We all have that billion-dollar business idea that may just work. 

Unfortunately, not all of us have the time to devote to it. Our schedules are crowded with emails, meetings, and to-dos, so the longer-term, not-so-urgent tasks wait patiently on our plates.

You can try the 90-90-1 rule to help you realize your dream.

For the next 90 days, devote the first 90 minutes of your work day to the one best opportunity in your life. Nothing else. Zero distractions. Just get that project done. Period.

It's important to get started. And set up a system that keeps you motivated.

Source: Muse

8. Crypto Corner

9. Memes of the Day

 

 

 

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