Key Stats for ZG Stock
- Past week’s performance: +1.0%
- 52-week range: $29 to $90
- Valuation model target price: $40
- Implied upside: 10.1% over 2.3 years
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An FTC Settlement Closes One Chapter, but Growth Keeps Accelerating
Zillow Group (ZG) shares were roughly flat to modestly higher this week, as investors weighed a resolved antitrust dispute against continued strength in the company’s newer growth segments. The stock remains far below its 52-week high, but this week’s news flow gave the market some clarity rather than fresh uncertainty.
On August 24, Zillow and Redfin settled with the FTC and five state attorneys general. Their dispute involved a 2022 rental listings syndication deal between the two major real estate platforms. In that deal, Zillow paid Redfin one hundred million dollars to wind down its multifamily advertising business. The FTC had called the arrangement anticompetitive and pursued legal action against both companies involved.
Under the settlement, the syndication partnership can continue through at least mid-two thousand thirty. Redfin must reenter the rental listing market next year to restore competition in this space. Both companies must offer standalone multifamily advertising products by two thousand twenty-seven as part of the deal.
That regulatory overhang landed weeks after Zillow posted Q2 revenue of $772 million. Revenue rose eighteen percent year over year and finished above the high end of guidance. Mortgage revenue surged 75% to $84 million on a 95% jump. Purchase loan origination volume drove the surge while rentals revenue grew thirty-one percent to two hundred nine million dollars.
CEO Jeremy Wacksman framed the more than 500 job cuts announced August 4 as supporting the “next phase of growth” rather than signaling weakness. If Zillow stock can decouple from the FTC headline and refocus investor attention on mortgage and rentals momentum, the setup here could improve quickly.
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Is ZG Stock Undervalued?
Under valuation model assumptions realized through 12/31/28, the stock is modeled using:
- Revenue growth (CAGR): 15.5%
- Operating margins: 11.2%
- Exit P/E multiple: 14.2x
Based on these inputs, the model estimates a target price of $40, implying 10.1% total upside from the current share price and a 4.2% annualized return over the next 2.3 years.
That annualized return sits below the 5% threshold that typically signals limited upside, which is notable given Zillow’s revenue growth is running well ahead of most consumer internet peers. The gap comes from operating margins, since Zillow still runs a relatively thin 11.2% margin even as topline growth accelerates.
Because mortgages and rentals are Zillow’s fastest-growing and highest-margin segments, further mix shift toward those businesses could push the operating margin assumption higher than the model currently allows. That would be the clearest path to a more attractive return profile from here.
The stock also carries a still-elevated multiple relative to its earnings history, a legacy of years when Zillow traded on growth alone rather than profitability. Until net income turns consistently positive, the market seems unwilling to pay up for the revenue growth story alone.
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Real Estate Platforms: How Zillow Compares
Zillow’s most direct competitor is Redfin (RDFN), its former antitrust rival and current syndication partner, which has struggled with profitability even as it grows its brokerage and rentals footprint. Redfin’s smaller scale means it lacks Zillow’s advertising leverage, and the settlement now requires Redfin to rebuild a standalone rental listings product it had exited years ago, a costly undertaking that could pressure its margins further.
CoStar Group (CSGP), owner of Homes.com, is a better-funded and faster-growing rival in residential listings, backed by CoStar’s much larger commercial real estate data business. CoStar has been spending aggressively on Homes.com marketing, and while its commercial segment carries stronger margins than Zillow’s residential business, its consumer residential unit is still working to catch Zillow’s traffic and brand recognition in home search.
Zillow’s real moat remains its audience scale and its Premier Agent advertising network, both of which are difficult to replicate quickly even as CoStar spends heavily to compete.
What’s Driving ZG Stock Going Forward?
The mandated rollout of standalone multifamily advertising products by 2027 is a catalyst worth watching closely, since it could either open a new revenue line for Zillow or introduce fresh competition from a reinvigorated Redfin rentals business. How Zillow positions its own standalone product will shape investor sentiment heading into 2027.
CFO Jeremy Hofmann’s expanded role to include chief operating officer responsibilities, announced August 6, signals a sharper company-wide focus on cost discipline following the layoffs. Investors will want to see whether that focus translates into margin expansion over the next few quarters, particularly within the mortgage and rentals segments that are already growing fastest.
Zillow’s affordability research, including its finding that U.S. households take about 15 years on average to break even on a home purchase versus renting, also feeds a broader industry narrative that could keep renters engaged with Zillow’s platform even if home sales stay soft.
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Should You Invest in Zillow Group?
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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!
