Zillow Group Class C (Z) AI Stock Analysis

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Zillow Group Class C

(NASDAQ:Z)

Rating:65Neutral

Price Target:

$73.00

▲( 10.56% Upside)

Zillow Group Class C earns a score of 65, reflecting its strong revenue growth and solid balance sheet, as well as positive earnings call insights. However, persistent net losses and valuation challenges, alongside neutral technical indicators, suggest caution. The company needs to manage expenses effectively to realize its growth potential.

Positive Factors

Revenue Growth

Zillow's Rentals revenue showed a significant 33% growth, benefiting from strong multifamily revenue increases.

Strategic Partnerships

Zillow's recently launched partnership with RDFN provides a notable unlock of additional rental supply, enhancing its two-sided marketplace.

User Engagement

Growth in average monthly unique users accelerated to 5%, showing increased engagement with Zillow's platform.

Negative Factors

Competitive Landscape

Competition is intensifying, especially from CoStar's Homes.com portal, which may require Zillow to spend more to maintain its competitive position.

Industry Risks

Potential industry changes pose risk as buyer-side commission rates could decline following changes from recent industry lawsuits and settlements.

Residential Segment Challenges

Residential revenue continues to face market-driven headwinds, growing only 6% year over year.

Zillow Group Class C (Z) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$15.90B

Dividend YieldN/A

Average Volume (3M)2.47M

Price to Earnings (P/E)―

Beta (1Y)1.33

Revenue Growth14.96%

EPS Growth49.24%

CountryUS

Employees6,819

SectorCommunication Services

Sector Strength89

IndustryInternet Content & Information

Share Statistics

EPS (TTM)0.41

Shares Outstanding183,358,690

10 Day Avg. Volume2,457,812

30 Day Avg. Volume2,466,420

Financial Highlights & Ratios

PEG Ratio-9.08

Price to Book (P/B)3.31

Price to Sales (P/S)0.00

P/FCF Ratio58.81

Enterprise Value/Market Cap1.00

Enterprise Value/Revenue1.88

Enterprise Value/Gross Profit9.32

Enterprise Value/Ebitda34.11

Forecast

1Y Price Target

$82.17

Price Target Upside24.44% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering8

Zillow Group Class C Business Overview & Revenue Model

Company DescriptionZillow Group, Inc., a digital real estate company, operates real estate brands on mobile applications and Websites in the United States. The company operates through three segments: Homes; Internet, Media & Technology; and Mortgages. The Homes segment is involved in resale of homes; and title and escrow services to home buyers and sellers, including title search procedures for title insurance policies, escrow, and other closing services. The IMT segment offers premier agent, rentals, and new construction marketplaces, as well as dotloop, display, and other advertising, as well as business software solutions. The Mortgage segment provides home loans; and marketing products including custom quote and connect services. Its portfolio of brands includes Zillow Rentals, Trulia, StreetEasy, Zillow Closing Services, HotPads, and Out East. The company was incorporated in 2004 and is headquartered in Seattle, Washington.

How the Company Makes MoneyZillow Group makes money primarily through its real estate ecosystem, which includes advertising, leads, and ancillary services. The company generates significant revenue from its Premier Agent program, where real estate professionals pay for advertising and receive leads from interested buyers and sellers. Additionally, Zillow offers paid services for rental professionals and property managers through Zillow Rentals. Another key revenue stream is Zillow Home Loans, providing mortgage origination and related services. The company also gains revenue from its Zillow Offers program, where it buys, sells, and rents properties directly, though this segment's focus has shifted over time. Strategic partnerships with real estate brokerages and technology integrations further enhance its revenue potential.

Zillow Group Class C Key Performance Indicators (KPIs)

Any

Average Unique Monthly Visitors

Average Unique Monthly Visitors
Measures the average number of distinct users visiting Zillow each month, reflecting brand reach, market penetration, and potential for monetization.

Chart InsightsZillow's average unique monthly visitors have shown a steady upward trend since 2019, with notable resilience despite fluctuations in the housing market. The recent earnings call highlights strong revenue growth, particularly in the Rentals segment, which aligns with the increased visitor engagement. However, challenges in the broader housing market could impact future growth. Zillow's strategic focus on expanding its housing super app and enhancing services for buyers and sellers is expected to sustain visitor growth and improve market share, especially in the Rentals segment, despite anticipated higher expenses in the next quarter.

Data provided by:

Main Street Data

Zillow Group Class C Financial Statement Overview

Summary

Zillow shows solid revenue growth and strong cash flow management, but struggles with profitability and return on equity. The high equity ratio indicates financial stability, yet operational inefficiencies hinder profitability.

Income Statement

Positive

Zillow's revenue has shown a moderate growth trajectory, increasing from $1.945 billion in 2023 to $2.236 billion in 2024. Gross Profit Margin stands strong at 76.4% for 2024, reflecting effective cost management. However, the company struggles with profitability, as evidenced by negative Net Profit Margin and EBIT Margin, indicating ongoing operational challenges.

Balance Sheet

Positive

Zillow's balance sheet reflects a robust equity position with a high Equity Ratio of 83.2%, suggesting financial stability and low leverage with a Debt-to-Equity Ratio of 0.11. However, the negative Net Income impacts the Return on Equity, which remains negative, highlighting the need for operational improvements.

Cash Flow

Positive

Zillow demonstrates healthy cash flow management with positive Free Cash Flow of $285 million in 2024 and an improvement in Operating Cash Flow. The Free Cash Flow to Net Income Ratio indicates strong cash generation relative to net losses, though the firm must address its consistent negative net income to enhance overall cash flow sustainability.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
2.24B	1.95B	1.96B	8.15B	3.34B
	Gross Profit
1.71B	1.52B	1.59B	1.75B	1.58B
	EBIT
-197.00M	-270.00M	-26.00M	-246.21M	60.94M
	EBITDA
198.00M	125.00M	123.00M	370.00M	119.96M
	Net Income Common Stockholders
-112.00M	-158.00M	-88.00M	-527.78M	-162.12M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.86B	2.81B	3.36B	3.13B	3.92B
	Total Assets
5.83B	6.65B	6.56B	10.70B	7.49B
	Total Debt
660.00M	1.83B	1.87B	5.01B	2.52B
	Net Debt
-422.00M	340.00M	401.00M	2.40B	816.63M
	Total Liabilities
981.00M	2.13B	2.08B	5.35B	2.74B
	Stockholders Equity
4.85B	4.53B	4.48B	5.34B	4.74B
Cash Flow		Free Cash Flow
285.00M	189.00M	4.36B	-3.28B	315.68M
	Operating Cash Flow
428.00M	354.00M	4.50B	-3.18B	424.20M
	Investing Cash Flow
395.00M	25.00M	-1.53B	1.09B	-1.04B
	Financing Cash Flow
-1.23B	-352.00M	-4.34B	3.15B	1.16B

Zillow Group Class C Technical Analysis

Technical Analysis Sentiment

Negative

Last Price66.03

Price Trends

50DMA

67.33

Negative

100DMA

72.50

Negative

200DMA

69.30

Negative

Market Momentum

MACD

-0.19

Positive

RSI

45.86

Neutral

STOCH

10.92

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For Z, the sentiment is Negative. The current price of 66.03 is below the 20-day moving average (MA) of 67.74, below the 50-day MA of 67.33, and below the 200-day MA of 69.30, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 45.86 is Neutral, neither overbought nor oversold. The STOCH value of 10.92 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for Z.

Zillow Group Class C Risk Analysis

Zillow Group Class C disclosed 49 risk factors in its most recent earnings report. Zillow Group Class C reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 3 New Risks

The capped call transactions may affect the value of our Class C capital stock. Q4, 2024

Our targets and disclosures related to ESG matters expose us to risks that could adversely affect our reputation and performance. Q4, 2024

We are subject to multiple risks related to customer and partner payments. Q4, 2024

Zillow Group Class C Peers Comparison

Overall Rating

UnderperformOutperform

Sector (60)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
YELP	77 Outperform	$2.39B	17.99	19.74%	―	5.93%	29.17%
CARG	66 Neutral	$3.08B	87.40	7.98%	―	0.63%	15.34%
Z	65 Neutral	$15.90B	―	-1.72%	―	14.96%	49.24%
ZG	64 Neutral	$15.90B	―	-1.72%	―	14.96%	49.24%
IAC	63 Neutral	$2.90B	―	-15.07%	―	-18.11%	-516.37%
Sector *	60 Neutral	$14.12B	6.43	-3.56%	3.69%	2.49%	-35.43%
KIND	44 Neutral	$562.41M	―	-18.77%	―	12.01%	35.71%

* Communication Services Sector Average

Performance Comparison

Zillow Group Class C

66.03

26.27

66.07%

YELP

Yelp

37.40

1.09

3.00%

Zillow Group Class A

65.27

26.11

66.68%

CARG

CarGurus

31.15

7.68

32.72%

IAC

IAC/InteractiveCorp.

36.31

-4.67

-11.40%

KIND

Nextdoor Holdings

1.47

-1.14

-43.68%

Zillow Group Class C Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: -2.73%|

Next Earnings Date:Jul 31, 2025

Earnings Call Sentiment Positive

Zillow Group's Q1 2025 earnings call reflected strong revenue growth and achievement of GAAP profitability, driven by impressive performance in the Rentals segment and strategic expansions. However, the housing market remains challenging, especially in the non-high-end segments. The company is facing increased expenses in the next quarter due to seasonal factors and partnerships.

Q1-2025 Updates

Positive Updates

Record-Breaking Revenue and Growth

Zillow Group reported Q1 2025 revenue of $598 million, up 13% year-over-year, exceeding their expectations and continuing the trend of double-digit revenue growth.

Strong Performance in Rentals Segment

Rentals revenue reached an all-time high of $129 million in Q1, up 33% year-over-year. Multifamily revenue grew 47%, and the number of multifamily properties on Zillow Rentals increased by 38% year-over-year.

GAAP Profitability Achieved

Zillow achieved GAAP profitability in Q1 2025 with a positive net income of $8 million and an EBITDA margin expansion by 200 basis points year-over-year to 26%.

Increased Adoption of Zillow Home Loans

Double-digit adoption of Zillow Home Loans across all Enhanced Markets was noted, with 70% of movers choosing financing through Zillow Home Loans also working with a Premier Agent partner.

Expansion of Enhanced Markets

The company expanded Enhanced Markets, with 24% of overall connections in Q1 happening in these markets, up from 21% in Q4. They aim to increase this to more than 35% by the end of the year.

Negative Updates

Challenging Housing Market Conditions

The housing market remains challenging with macroeconomic uncertainties, impacting overall For Sale growth, which only grew 8% year-over-year.

High-End Market Outperformance

The high-end of the market contributed over 500 basis points of growth in total industry transaction value, while the rest of the market remained largely flat, which is where Zillow tends to operate more frequently.

Increased Expenses in Q2

EBITDA expenses are expected to increase from $445 million in Q1 to an estimated $495 million in Q2, driven by normal seasonal marketing and incremental lead costs associated with the Redfin Rentals partnership.

Company Guidance

During Zillow Group's first quarter 2025 financial results call, the company provided guidance indicating a strong performance and optimistic outlook for the year. Zillow reported a total Q1 revenue of $598 million, marking a 13% year-over-year increase, with For Sale revenue growing 8%, Residential revenue up 6%, Mortgages revenue up 32%, and Rentals revenue increasing 33% to reach $129 million. The company achieved a GAAP profitability milestone with an adjusted EBITDA of $153 million, expanding the EBITDA margin by 200 basis points to 26%. Zillow aims for full-year 2025 goals of low to mid-teens revenue growth, continued EBITDA margin expansion, and positive GAAP net income. The company highlighted its strategic focus on expanding its housing super app, increasing market share in the Rental segment, and enhancing its services for buyers and sellers, contributing to its robust financial outlook.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.