Trulia Reports Higher Consumer Traffic In May, Shares Gain - Analyst Blog

Shares of Trulia, Inc. TRLA were up 2.89% on Friday's trade after it recorded a significant rise in monthly unique visitors in May. Unique visitors increased 47% year over year (51 million visitors) as Trulia's national marketing campaign and new mobile capabilities received massive response. It is worth noting that in the last reported quarter (first-quarter 2014 ended Mar 31, 2014), Trulia witnessed a 42% rise in its unique visitor count to 44.6 million.

Trulia's two-phase national marketing campaign caught the imagination of home buyers, sellers and real estate agents. While the first phase was the launch of advertising campaigns on online, mobile, television and radio platforms, the second phase involved a $50,000 Home Give Away Sweepstakes launched on May 12. The sweepstakes will end in June.

This is a strategic campaign as the sweepstakes winner can spend the amount won on the down payment for a house that they wish to buy or any other expense related to their home. A survey conducted by Harris Interactive for Trulia revealed that making the down payment is the biggest stumbling block for potential home owners.

Thus, the company devised a marketing campaign addressing this concern. The initiative encouraged potential home buyers to visit the company website and participate in the sweepstakes which increased the unique visitor count. Of course, only a small percentage of traffic based on the desire to win a sweepstakes is likely to convert to sales because ability to buy is the most important requirement in real estate purchases and this does not change with an increase in convenience

Although the company's investments in marketing activities are boosting traffic, these investments are affecting the company's profitability. Trulia's operating expenses in the last quarter increased 158.3% year over year overshadowing the 127% surge in its top line. This, in turn, affected the bottom line with losses widening on a year-over-year basis.

Moreover, competition from the likes of Zillow Z and Move, Inc. MOVE remains the headwind, going forward.

Currently, Trulia has a Zacks Rank #4 (Sell). Investors may consider a better-ranked stock like Micron Technology MU sporting a Zacks Rank #1 (Strong Buy).