Hemnet – Broken Moat or Misunderstood Monopoly?
An update on Swedish real estate portal
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Introduction
As a recap, Hemnet is the monopolist for online real estate listings in Sweden with a c.90% share of listings. Think of it as the Swedish-equivalent of Australia’s realestate.com.au. The growth in the business had been spectacular: Hemnet’s property seller revenue increased by 6x between FY18 and FY24 (a 34.8% annual growth rate), and consolidated operating profit increased by 8.6x over the same period (a 43.3% annual growth rate). We wrote about the stock in our March 2025 quarterly letter, with a bullish thesis that mapped out the potential for a continuation of this strong performance. We also discussed Hemnet’s pricing actions here in a subsequent article.
What has happened in the interim has been a deterioration in the growth rate of Hemnet and a steep decline in the share price. For context, Hemnet’s share price fell from SEK 420 in February 2025 to around SEK 160 in recent weeks. We wanted to explain in greater detail what has happened to cause such a precipitous share price decline, whether the bear case has merit, and what the future could look like for Hemnet from here.
Is Hemnet’s moat broken and its future growth prospects permanently impaired, or is this a monopoly asset whose price has been buffeted by erroneous narratives, with the company’s shares now trading at an abnormally low 22x forward EPS?