Now, this just seems odd. The NASDAQ OMX Group announced today that it plans to remove Zillow as one of the companies in the NASDAQ Internet Index, with a spokesperson for the organization telling the Puget Sound Business Journal that the Seattle online real estate company no longer was eligible because it is a real estate company, not an Internet company
That’s fine. One certainly could make the argument, and I’ve seen others do so. (I tend to disagree with that assessment since Zillow derives the bulk of its revenue from online advertising and other Web-based services, not from the real estate transaction itself as Redfin and other real estate companies do).
Nonetheless, you can make the case for Zillow being in the real estate bucket.
But here’s the part that I don’t get.
In the same press release that Nasdaq announced that they planned to drop Zillow from the Internet Index, they added Trulia.
That’s right. The same Trulia that competes directly with Zillow in nearly every aspect of the business. In fact, the two companies are so closely linked that I’ve routinely pointed out how similar their businesses are, including today’s earlier story: “Zillow shares top $50 as Trulia looks to add to war chest for acquisitions.”
How in the world can Trulia be classified as an Internet company, and Zillow as a real estate company?
Seems like a pretty bizarre choice. (We’ve got an email into Nasdaq for a more detailed explanation).
Cythnia Nowak, a spokesperson for Zillow, declined to speculate on why Zillow would be removed at the same time that Trulia was added. But she also stressed that Zillow is moving beyond the desktop Internet, focusing instead on mobile.
“Zillow is a mobile company. More than half our traffic comes from a mobile device; on weekends it’s 60 percent,” she said. “Consumers come to Zillow to get information and to connect with professionals throughout all stages of the real estate lifecycle, from renting, to buying and selling, to financing, to improving a home.”
That’s true. But that’s also why they are going to Trulia, whose stock market value is half of Zillow’s.
In addition to Zillow, Seattle-based RealNetworks is set to be removed from the Internet Index. But, in that case, it was tied to Real not meeting certain trading requirements.
The changes to the Index are set to take place on March 18th. Here are the 12 companies that are being added to the Internet Index: Bazaarvoice, Inc. (Nasdaq:BV), CoStar Group, Inc. (Nasdaq:CSGP), Demandware, Inc. (NYSE:DWRE), Global Eagle Entertainment Inc. (Nasdaq:ENT), E2open, Inc. (Nasdaq:EOPN), Facebook, Inc. (Nasdaq:FB), Responsys, Inc. (Nasdaq:MKTG), Overstock.com, Inc. (Nasdaq:OSTK), Bankrate, Inc. (NYSE:RATE), TripAdvisor, Inc. (Nasdaq:TRIP), Trulia, Inc. (NYSE:TRLA) and Zix Corporation (Nasdaq:ZIXI).
And here are the six that are being removed: Carbonite, Inc. (Nasdaq:CARB), Keynote Systems, Inc. (Nasdaq:KEYN), Limelight Networks, (Nasdaq:LLNW), RealNetworks, Inc. (Nasdaq:RNWK), XO Group, Inc. (NYSE:XOXO) and Zillow, Inc. (Nasdaq:Z).