The REA Group Limited (ASX: REA) share price will be under scrutiny this morning as it was announced CEO Tracey Fellows is stepping down from her role.
She will take up a new role as News Corp’s (ASX: NWS) President of Global Digital Real Estate based in New York. In her new role she will be responsible for driving strategy and growth across all of News Corp’s digital real estate interests.
She will remain on the Board of REA Group on behalf of News Corp and will support the appointment of her replacement and the transition of leadership.
Robert Thomson, Chief Executive of New Corp, said “Audiences, revenue and profits at REA Group have all expanded significantly during Tracey’s tenure as CEO. She has been an irrepressible innovator and has led the company into intelligent adjacencies, such as financial services and property data, which have broadened the revenue base and built a platform for future growth.”
What Ms Fellows has achieved could be precisely why REA Group shareholders worry a little. Will REA Group be as innovative and growth-orientated without her? It’s a question worth considering.
She has been in the role for four years, so REA Group had grown significantly before she arrived. She will continue to be in the picture for REA Group, although not in the leading role.
But, REA Group may be able to benefit from her departure. Mr Thomson went on to say “We are keen to capitalize on our sterling success in digital real estate by driving even faster growth in our existing businesses, such as realtor.com”.
You may remember that REA Group has a strategic stake in the US business. If that US business can start generating some good profit then REA Group would be a major beneficiary. In REA Group’s FY18 result it said that Move Inc grew revenue by 15% to US$452 million.
REA Group is trading at 30x FY19’s estimated earnings. I have always liked the potential for its international investments to work out over the long-term. I certainly prefer REA Group to Domain Holdings Australia Ltd (ASX: DHG).
I think any short-term negativity could be a good time to buy a parcel of shares in REA Group and buy more if the housing market negatively affects REA Group over the next couple of years.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.