Key Stats for Zillow Stock
- Price Change for Zillow stock: -8%
- $ZG Share Price as of Dec. 15: $66.67
- 52-Week High: $90
- $ZG Stock Price Target: $89
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What Happened?
Zillow (ZG) stock dropped almost 8% on Monday after reports surfaced that Google is testing real estate listings directly in its search results. The online real estate platform lost roughly $1.5 billion in market value as investors worried about potential competition from the search giant.
Over the weekend, real estate tech strategist Mike DelPrete published screenshots showing Google Search results that included property listings powered by real estate data company HouseCanary. The test listings let users view full property details, request tours, and contact agents right from Google’s search page. That’s basically the same functionality you’d find on Zillow’s marketplace.
For now, Google’s real estate search features only work in select markets and on mobile devices. But the market’s reaction to Zillow stock shows investors aren’t waiting around to see how this plays out.
The decline is particularly notable given that Zillow had been executing well despite a challenging housing market. The company recently reported 16% revenue growth in the third quarter and has been expanding margins, while housing transactions remain stuck near 4 million existing-home sales annually.
Wall Street analysts were quick to weigh in with mixed views on the threat level.
Wells Fargo’s Alec Brondolo downplayed near-term concerns, noting that Zillow doesn’t rely heavily on organic search traffic. Most of Zillow’s 228 million quarterly site visits come directly through the Zillow.com website, mobile apps, and properties like StreetEasy rather than through Google searches.
Brondolo compared Google’s approach to how it handles hotel searches, where online travel agencies like Expedia bid for ad placements rather than Google going direct.
“We would expect a similar approach in real estate, with Zillow, Homes.com, Realtor.com, etc. bidding for home listing ad units,” he wrote in a note to clients.
But not everyone is so optimistic about Zillow stock’s prospects. Goldman Sachs analyst Michael Ng sees Google’s real estate listings as a longer-term competitive threat.
He pointed out that Google’s new format directly competes with Zillow’s Premier Agent program by helping real estate agents generate leads from prospective buyers.
“While we don’t expect a direct near-term impact on Zillow’s business, given that most of Zillow’s traffic is direct… we view this development as a long-term risk for real estate portals like Zillow,” Ng wrote.
Oppenheimer’s Jason Helfstein warned that Google’s expansion could eventually reduce the number of consumers visiting Zillow.com, which would hurt the company’s ability to monetize its platform.
However, he noted that “the impact would likely take years to play out and would need to be rolled out across the US to meaningfully impact real estate portal traffic.”
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What the Market Is Telling Us About Zillow Stock
The sharp drop in Zillow stock suggests investors are taking the Google threat seriously, even if the immediate financial impact remains unclear. The market appears to be pricing in the risk that Google could siphon off some portion of Zillow’s audience and revenue over time.
This concern comes at a challenging moment for Zillow. The company has been executing a strategy to transform from a simple listing site into a full “housing super app” that helps users complete transactions through services like Zillow Home Loans and its Premier Agent program.
That strategy has been working, with Zillow growing revenue mid-teens despite flat housing market conditions.
But Google’s entry raises questions about whether Zillow can maintain its dominance as the go-to destination for home searches. If Google can keep users on its platform instead of sending them to Zillow, that could eventually pressure both traffic and pricing power.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
