REA Group → Network effect monopoly, basically owns online real REA Group LtdASX_DLY:REAtfctingMoat type: Network effects Why it dominates: realestate.com.au = default platform for all real estate listings More listings → more buyers → more agents → repeat Since Feb 2025 share price has dropped from all time high of $275 due to 1) Earnings miss vs very high expectations REA reported solid growth, but it missed market expectations slightly. That triggered a sharp selloff (one day ~-17% intraday). Profit was also affected by things like higher tax and absence of one-off gains, leading to weaker headline numbers. 2) Slowing listings (this is the BIG one) Residential listings fell ~6% in the latest half. Listings are REA’s core revenue driver. Fewer houses for sale = fewer paid listings = slower revenue growth due to: Higher interest rates Lower transaction volumes Weak housing turnover 3) Valuation compression (multiple shrink) REA was trading at very high multiples (~40–50x earnings range previously). Now: Investors are rotating out of expensive “quality tech-like” names Into cyclicals, resources, or cheaper stocks 4) Macro / housing cycle pressure Recent macro backdrop: Weak consumer & business sentiment High inflation + rates Lower confidence in property transactions REA is indirectly a leveraged bet on property turnover, not just prices. 5) Competition + regulatory risk Ongoing concerns about: Competition (e.g. Domain, new entrants, AI disruption) ACCC scrutiny on pricing power These have been weighing on sentiment even while earnings remain strong. 6) “Great company, bad timing” effect REA is still: Growing revenue Increasing dividends Running buybacks But the stock: Is down ~30–35% over 12 months in some periods Because market expectations reset faster than fundamentals Why invest? Potential for 57% upside gain.