If I could add my 2 cents worth I believe REA will continue to...

If I could add my 2 cents worth I believe REA will continue to make more money however the business model has grown as much as it possibly can.



On the upside the revenue forecast based on the last 2 annual report seems to suggest it is growing*
despite declining in subscription numbers. This is a very important issue for number of reasons.

1- REA in the last couple of years completely restructured its subscription model for the real estate agents against the agents revolt. So by my estimation the subscription numbers are at least 25% lower than 2 years ago. Contrary to the annual report of 2 years ago Company deliberately omitted to comment on subscription numbers. which means this is a sensitive area.

2- the reduction is subscription numbers for REA is directly proportional by the increase in number of subscriptions by its competitors.

3- Real estate agents have formed an alliance to actively compete against REA and now backing Squiiz

4- in the last 6 months Squiiz backers have sold their substantial stake in REA

5- the success of any website is largely due to its subscribers when they are flocking elsewhere and people have to go through 3-4 different sites to get the full list of properties for sale I suggest the market domination is lost and the opportunity has evaporated for good.

6- REA threats its clients with utmost contempt and the agents are fed up.

7- REA's worst enemy is REA - the model is so successful that as we speak at least 10 new portals are preparing to lunch ( ie US based Core Logic)


I could list dozen other reasons why REA SP will not remain at this levels -

On the plus side REA is a tightly held stock by NewsLtd which means they probably fend off any moves to change the board.

However that also means that their capacity to endure the pain as a result of any downturn is much higher than you or me - so to summarize if the SP is going to fall only the mums and dad shareholders will suffer.

I would not buy this stock now or any time soon unless REA change their ways which is unlikely.


DYOR